2014 ANNUAL REPORT - 宁波银行

2014 ANNUAL REPORT

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BANK OF NINGBO Co.,Ltd

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2014 ANNUAL REPORT

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The Board of Directors, Board of Supervisors, directors, supervisors and senior

managers of the Company ensure the authenticity, accuracy and completeness of

contents, and guarantee no fraulds, misleading statements or major omissions in this

report. They are willing to burden any individual and joint legal responsibilities.

All the directors, supervisors and senior managers are able to guarantee the

authenticity, accuracy and completeness of this report without any objection.

The 6th meeting of the 5th Board of Directors of the company approval the text and

abstract of 2014 Annual Report on 24 April 2015. 15 out of 17 directors were present.

Director Li Hanqiong authorize director Chen Guanghua to vote. Director Ben Shenglin

authorize director Zhu Jiandi to vote. Part of supervisors attended this meeting as well.

The Company's profit distribution plan was passed by the Board of Directors as

follows: taking the total share capital on 31 Dec. 2014 as the base number, cash bonus

of RMB 4.5 yuan (including tax) per 10 shares was distributed to all shareholders,

and 2 shares for every 10 shares were given by converting capital reserve into share

capital. This plan will be submitted to 2014 general meeting of stockholders for further

approval.

The Chairman of the board Mr. Lu Huayu, the president Mr. Luo Mengbo, the vice

president Mr. Luo Weikai, who is in charge of accounting, and the general manager

of accounting department Ms. Sun Hongbo hereby declare to pledge the authenticity,

accuracy and completeness of financial statements in the annual report.

Financial data and indicators included in this annual report are following the criterias of

the Chinese Accounting Standard for Business Enterprises. All data in the consolidated

financial statements of Bank of Ningbo Co., Ltd. and its subsidiary Yongying Fund

Management Co., Ltd. is subject to the unit of RMB except for further explanation.

Ernst & Young Hua Ming LLP audited the 2014 Financial Statements of the Company

in accordance with domestic accounting principles and signed off longtop's financial

statements.

The forward-looking statements in this annual report including future plans are not

commitments to investors. Thus please pay attention to investment risks.

Major risks

The company has described major risks and will adopt the measures to control risks.

For details, please refer to relevant contents about risk management in Sectoion Six

Report of the Board of Directors.

Chapter One Important Notes

2014 ANNUAL REPORT

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Contents

Chapter One Important Notes ----------------------------------------------------- 001

Chapter Two Company Profile ---------------------------------------------------- 003

Chapter Three Highlights of Accounting Data and Financial Indicators ----- 008

Chapter Four Chairman's Statement --------------------------------------------- 013

Chapter Five President's Statement --------------------------------------------- 015

Chapter Six Report of the Board of Directors ------------------------------ 017

Chapter Seven Important Matters -------------------------------------------------- 085

Chapter Eight Changes in Share Capital and Shareholding --------------- 099

Chapter Nine Directors, Supervisors, Senior Manager and Basic

Information on Employees --------------------------------------- 111

Chapter Ten Corporate Governance -------------------------------------------- 131

Chapter Eleven Internal Control ------------------------------------------------------ 142

Chapter Twelve Financial Statements ---------------------------------------------- 154

Chapter Thirteen Catalogue ------------------------------------------------------------- 155

Chapter Fourteen Audited Financial Statement ------------------------------------ 156


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Chapter Two Company Profile

I. Company Information

II. Contact

Abbreviation of Stock Bank of Ningbo

Stock Code 002142

Stock Exchange Listed Shenzhen Stock Exchange

Chinese Name 宁波银行股份有限公司

Chinese Abbreviation 宁波银行

English Name Bank of Ningbo Co., Ltd

English Abbreviation Bank of Ningbo

Legal Representative Lu Huayu

Registered AddressNo.700, South Ningnan Road, Yinzhou District, Ningbo

City, Zhejiang Province, China

Post Code of Registered Address 315100

Office AddressNo.700, South Ningnan Road, Yinzhou District, Ningbo

City, Zhejiang Province, China

Post Code of Office Address 315100

Website WWW.NBCB.COM.CN

E-mail [email protected]

Secretary of the Board of Directors Securities Affairs Representative

Name Yang Chen Chen Junfeng

AddressNo.700, South Ningnan Road, Yinzhou

District, Ningbo City, Zhejiang ProvinceNo.700, South Ningnan Road, Yinzhou

District, Ningbo City, Zhejiang Province

Telephone 0574-87050028 0574-87050028

Fax 0574-87050027 0574-87050027

E-mail [email protected] [email protected]

2014 ANNUAL REPORT

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Chapter Two Company Profile（continued）

III. Information Disclosure and Place of Maintenance

IV. Registration Changes

V. Other Information

(I) Accounting firm appointed by the company

Newspaper Nominated by the Company for

information disclosureChina Securities Journal, Shanghai Securities

News, Securities Times and Securities Daily

Website Nominated by China Securities

Regulatory Commission (CSRC) for Anuual

Report Publishment

http://www.cninfo.com.cn

Place for Maintenance of the Annual ReportOffice of the Board of Directors of Bank of

Ningbo Co., Ltd.

Registration Date

Registration Place

Registration No. of Business License of Enterprise as

Legal Person

Tax Registration No.Organization

Code

Initial Registration

April 10th,

1997

Ningbo

Administrative

Bureau for

Industry and

Commerce

No.

330200400003994

G.S.Y.Z.NO.

330201711192037,

S.Y.D.Z. NO.

330204711192037

71119203-7

Changes of Main Business After Listing

None

Changes of Controlling Shareholdersin the Past

None

Name of Accounting Airm Ernst & Young Hua Ming LLP (Limited Liability Parternership )

Office Address of the Accounting Firm

Floor 50 of Shanghai World Financial Center, No.100, Century Avenue, Shanghai City

Signed Accountants Guo Hangxiang, Chen Sheng


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VI. Development Vision, Enterprise Culture and Investment Value

(I) Development Vision: to develop as a respected modern commercial bank with a good

reputation and core competitiveness

(II) Enterprise Culture: honesty and professionalism, compliance and efficiency, integration

and innovation

(III) Investment Value:

1. Adhere to the entry principle of "knowing the market and understanding the customers", insist on

creating eight profit centers, namely Cooperate Banking, Retail Banking, Personal Banking, Financial

Market, Credit Card Center, Bill Business, Investment Banking, Asset Custody, etc., so as to form a

diversified profit growth mode.

2. Adhere to the development strategy of "joint development of regional markets", continue to

promote unified actions between the head office、branches and sub-branches, comprehensively

design business procedures, and continuously enhance execution construction. The scale and profit

of branches have exceeded fifty percent, of the whole company, the scale and profit of Personal

Banking and Retail Company in Ningbo are increased to 50% as well.


(II) Sponsor Institution Engaged for Continuous Supervision during the Reporting Period

(III) During the reporting period, there is no need for the Company to engage a financial

consultant to perform the duty of continuous supervision.

Sponsor InstitutionOffice Address of the

Sponsor InstitutionSponsor

RepresentativePeriod of Continuous

Supervision

CITIC Securities

CITIC Securities Mansion, No.48,

Liangmaqiao Road, Chaoyang District,

BeijingCITIC Securities

Mansion, No.8, Central 3rd Road, Futian

District, Shenzhen City, Guangdong Province

Jiang Yin, Qiu ZhiqianFrom Oct.9, 2014 to the end of 2015 accounting

year

2014 ANNUAL REPORT

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3. Follow business aim of "being well-matched, serving small and medium-sized enterprises",

offer specialized financing service to customers; since the smooth running of Maxwealth Fund

Management Co., Ltd. which is dominated by the Company, Maxwealth Financial Leasing Co., Ltd.,

as company's wholly-owned subsidiary, is authorized. The means of services become more flexible,

while the range is widen.

4. Abide by the concept "reducing cost by controlling risk", build a full-process risk management

mode and a vertical independent credit approval system, strictly implement the five mechanisms for

prevention and continue to optimize compliance management, so as to keep asset quality at a good

level and to prevent various risks effectively.

VII. Major Awards and Rankings in 2014

(I) In January, 2014, "Best Small and Medium-Sized Commercial Bank" on the 2nd "Leading China"

Summit Forum of innovation and development in financial industry, which was jointly hold by JRJ.

com and PBC School of Finance in the Tsinghua University;

(II) In May, 2014, "2013 Best Small and Medium-Sized Corporate" in the 1st competition of listed

companies, organized by Sina Finance;

(III) In May, 2014, special award of the 3rd Ningbo "Top Ten Donation Enterprises" issued by the

Ningbo Charity Federation;

(IV) In June, the third place of "2013 Scientific and Technological Development Award" offered by

the Head Office of the People's Bank of China in the platform of company's medium and small-sized

enterprise online financing business project;

(V) In July, 2014, "2013 Best Jin Niu Investor Award" by China Securities Journal;

(VI) In July, 2014, on "the 2nd Jin Niu Financial Management Forum", the company and its products

were rewarded as "2013 Jin Niu Money Management Banking Award" and "2013 Jin Niu Products of

Money Management";

(VII) In September, 2014, the 2nd Outstanding Contribution Award of China Charity (company

award)" issued by the China Charity Federation;

(VIII) In September, 2014, in the list of "2014 Top 1000 International Banks" issued by the Banker,

the Company was ranked the 220th with about 4.165 billion U.S. dollars tier-I capital;


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(IX) In September, 2014, in the list of "2014 Top 500 International Banks" issued by the Banker, the

Company was ranked the 264th and rated as A+;

(X) In December, 2014, the Company was rated as Baa2 by Moody, the same as famous national

commercial banks;

(XI) In January, 2015, "The Most Influential Award in 2014"and "The Best Derivatives Transaction

Award in 2014" in domestic currency market between banks, which were issued by the China

Foreign Exchange Trade System(CFETS); transaction supervisors and traders were respectively

rewarded by the titles of "Excellent Transaction Supervisor" and "Excellent Trader".

2014 ANNUAL REPORT

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Chapter Three Highlights of Accounting Data and Financial Indicators

I. Key Accounting Data and Financial Indicators

During the reporting period, the Company carried out adjustments on previous accounting data as

the accounting policies have changed, seeing "II. Compiling Basis of Financial Statement, 2. several

amended/new accounting standards" for details.

Operating Performance(RMB thousand Yuan)

Year 2014 Year 2013Increases/

Decreases by this year

Year 2012

Operating Income 15,356,750 12,761,479 20.34% 10,341,836

Operating Profit 7,026,577 6,060,031 15.95% 5,044,548

Total Profit 7,006,892 6,051,379 15.79% 5,098,041

Net Profit 5,634,130 4,847,265 16.23% 4,068,137

Net Profit Belonging to Shareholders of the Parent Company

5,627,466 4,847,071 16.10% 4,068,137

Net Profit Belonging to Shareholders of the Parent Company After Non-recurring Profits and Losses

5,645,248 4,852,157 16.35% 4,032,721

Net Cash Flow from Operating Activities

22,776,297 38,737,119 (41.20%) 48,165,044

Per Share（RMB Yuan/share）

Basic Earnings per share (EPS) 1.89 1.68 12.50% 1.41

Diluted Earnings per share (EPS) 1.89 1.68 12.50% 1.41

Basic EPS after Non-recurring Profits and Losses

1.90 1.68 13.10% 1.40

Net Cash Flow from Operating Activities per share

7.01 13.43 (47.80%) 16.70

Net Asset per share Belonging to the Parent Company

10.49 8.84 18.67% 7.67

Financial Ratios

Fully-diluted Return on Equity (ROE) 16.51% 19.00%Decreased by

2.49 percentage 18.39%

Weighted Average ROE 19.45% 20.41%Decreased by

0.96 percentage 19.97%


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Operating Performance(RMB thousand Yuan)

Year 2014 Year 2013Increases/

Decreases by this year

Year 2012

Fully-diluted ROE after Non-recurring Profits and Losses

16.56% 19.02%Decreased by

2.46 percentage18.23%

Weighted Average ROE after Non-recurring Profits and Losses

19.51% 20.43%Decreased by

0.92 percentage19.80%

1. The relevant indicators are calculated in accordance with the provisions of No.2 of Information Disclosure Contents and Format Norm for the Companies Issuing Securities Publicly—Contents and Format of Annual Report (revised in 2014) and No.9 of Information Disclosure and Compilation Rules for the Companies Issuing Securities Publicly: Calculation and Disclosure of ROE and Earnings Per Share (revised in 2010).

2. Operating income includes net interest income, net fees and commissions income, investment income, gains from changes in the fair value, exchange gains and other business incomes.

Note:

Scale indicators(RMB thousand yuan)

Dec. 31, 2014

Dec. 31, 2013

Increases/Decreases by

this year

Dec. 31, 2012

Total Assets 554,112,618 462,188,029 19.89% 369,942,846

Client Loans and Advances 210,062,182 171,189,666 22.71% 145,617,543

－Personal Loans and Advances 72,735,349 53,237,185 36.63% 35,621,124

－Corporate Loans and Advances

127,804,398 114,769,741 11.36% 103,692,853

－Discount on Notes 9,522,435 3,182,740 199.19% 6,303,566

Loan Loss Reserve 5,312,304 3,887,496 36.65% 3,052,914

Total Liabilities 519,948,406 436,666,141 19.07% 347,825,886

Client Deposits 306,531,829 255,278,327 20.08% 207,577,270

－Personal Deposit 74,206,208 61,399,447 20.86% 46,718,799

－Corporate Deposit 232,325,621 193,878,880 19.83% 160,858,471

Interbank Borrowing 14,071,981 13,015,003 8.12% 22,203,240

Chapter Three Highlights of Accounting Data and Financial Indicators（continued）

2014 ANNUAL REPORT

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Scale indicators(RMB thousand yuan)

Dec. 31, 2014

Dec. 31, 2013

Increases/Decreases by

this year

Dec. 31, 2012

Shareholders' Equity 34,164,212 25,521,888 33.86% 22,116,960

Including: Equity Belonging to Shareholders of the Parent Company

34,091,097 25,506,693 33.66% 22,116,960

Net Capital 41,844,020 32,735,921 27.82% Unapplicable

Including: Tier-I net Capital 33,994,546 25,414,476 33.76% Unapplicable

Net Risk-weighted Assets 337,552,562 271,379,933 24.38% Unapplicable

retroactive adjustment has been carried on data in same periods of 2012 and 2013 in accordance with the latest enterprise accounting standard.

Calculation is conducted in accordance with the provisions of No.1 of Explanatory Announcement of Information Disclosure for the Companies Issuing Securities Publicly-- Non-recurring Profit and Loss (revised in 2008).

Note:

Note:

II. Non-recurring profit and loss items and amount

ITEM Year 2014 Year 2013 Year 2012

Profit and loss from disposal of non-current assets, including the written-off part of accrued provision for assets impairment

100 (20,463) 64,849

Government compensations included in current profits and losses

-　 - -

Profit and loss from changes in the fair value of investment real estate with the fair value mode for follow-up measurement

(13) 1,871 (11,203)

Other non-operating incomes and expenditures except for the above items

(19,785) 11,811 (6,424)

Impacts by income tax 1,916 1,695 (11,806)

Total (17,782) (5,086) 35,416

Unit: (RMB) Thousand



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III. Additional Financial Indicators

ITEMRegulatory Standard

Year 2014 Year 2013 Year 2012

According to Rules for Regulating the Capital Adequacy Requirement of Commercial Banks (for Trial )

CapitalAdequacyRatio (%)

≥10.5 12.40 12.06 Unapplicable

Tier-I CapitalAdequacyRatio (%)


Core Tier-I Capital AdequacyRatio (%)


According to to Rules for Regulating the Capital Adequacy Ratios of Commercial Banks

Capital Adequacy Ratio (%)

≥8 13.31 13.88 15.65

Core Capital Adequacy Ratio (%)

≥4 10.32 10.16 11.49

Liquidity Ratio (RMB and foreign currencies) (%)

≥25 54.61 42.68 41.99

Liquidity coverage ratio (%) ≥60 101.48 Unapplicable Unapplicable

Ratio of interbank(RMB) (%)

Proportion of borrowing funds

≤8 1.32 1.54 4.66

Proportion of lending funds

≤8 0.89 0.22 3.30

Ratio of deposits and loans(RMB and foreign currencies) (%)

≤75 64.12 61.97 67.74

Ratio of non-performing loans (%) ≤5 0.89 0.89 0.76

Provision coverage (%) ≥150 285.17 254.88 275.39

Loan provisioning rate (%) 2.53 2.27 2.09

Loan proportion for the largest single client (%)

≤10 2.56 3.08 2.44

Loan proportion for the ten largest single clients (%)

≤50 12.70 15.54 16.10

Credit proportion for the largest single group client(%)

≤15 4.40 6.73 3.99


2014 ANNUAL REPORT

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ITEMRegulatory Standard

Year 2014 Year 2013 Year 2012

Normal loan migration rate (%)

Migration rate of normal loans

　 4.50 2.92 2.67

Migration rate of special-mentioned loans

　 42.56 38.49 14.81

Migration rate of non-performing loans (%)

Migration rate of subprime loans

　 54.99 64.07 76.75

Migration rate of doubtful loans

　 49.65 31.15 38.95

Return on total assets (%) 　 1.11 1.16 1.29

Interest collection ratio (%) 96.19 96.06 98.53

Cost-income ratio (%) 　 32.07 34.86 34.13

Asset-liability ratio (%) 　 93.83 94.48 94.02

Net interest spread (%) 2.50 2.46 2.76

Net interest margin (%) 2.51 2.51 2.83



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In 2014, as the world economic recovery remained shakily, Chinese economy, though relatively in

a high growth rate, was confronted with emerging structural contradictions and decreasing. The

banking industry faced a new era in financial evolution. However, as the marketization of interest

rates accelerating, the internet financing emerging, regulatory policies becoming rigorous, and

competition in the industry intensifying, banking industry is facing a more complex business

environment.

Facing the new situation and new challenge, the Company persisted in the concept of"prudent

operation and stable development". It actively seized market opportunities, accelerated the

promotion of operational transformation, continued to advance the construction of profit centers,

comprehensively enhanced risk control capacity and gradually improved management quality and

competitiveness. Up to Dec.31st, 2014, the Company had a total asset of 554.113 billion Yuan and

realized the annual net profit of 5.627 billion yuan attributed to the equity shareholders of the

parent company, up by 16.10% compared to the previous year. It owned 246 operating institutions,

increasing by 37 since the beginning of the year, It, thus effectively meets the requirements of

sustainable development of the Company.

We continued to optimize business structure. The Company had established a business mode

with eight profit centers cooperated, namely Corporate Banking, Retail Banking, Personal Banking,

Financial Market, Credit Card, Bill Business, Investment Banking and Asset Custody, and had gradually

changed the traditional profit growth pattern by a high spread between lending and deposit rates.

Under the cooperation between the head office, branches and sub-branches, the development

dynamics was more balanced, diversified businesses in branches were steadily promoted. Scale and

profit of branches have occupied more than half of them in the whole Company. The operation in

Ningbo had transformed successfully, as Retail Banking increased its proportion to 50% in terms of

scale and profit, which formed an endogenous development mechanism.

We continued to advance our quality of services. The Company always adheres to the fundamental

point of providing more diversified products and more efficient services. As Yongying Fund

Management Co., Ltd. was successfully established, in 2014, Yongying Financial Leasing Co., Ltd., as

wholly-owned subsidiary of the Company, was prepared to construct, signifying that the Company

initiated its integrated operation and the channel for customer service stretched out continuously.

Meanwhile, banking project of operation process was started on time and "financial factory" type

of medium and background service supporting system was established formally, so that working

procedures had been effectively shortened, efficiency had been continuously improved and good

customer reputation of Bank of Ningbo in the market had been built.

We withstood the test of risk management. The Company held the principle of "Risk control is cost

reduction". We improved the overall risk management system, and structured the comprehensive

Chapter Four Chairman's Statement

2014 ANNUAL REPORT

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Chapter Four Chairman's Statement（continued）

Chairman:

risk management system which covered credit risk, market risk, operational risk, moral risk, legal

risk and reputation risk. The Company implemented vertical and independent credit approval

system to effectively avoid industrial and regional risks. It had made substantial progress in new

capital accord project, with risk monitoring and control means enriched gradually. In September

2014, the Company successfully completed Secondly Public Offering and new capital about 3.1

billion yuan was increased, so that the capital of the Company was more sufficient and the capacity

of withstanding risk was significantly enhanced.

We paid more attention to technological innovation. The Company always take the improvement

of technological competitiveness as a priority. By enhancing systematic construction and software

development, stronger support for the development of business had been offered. In 2014, the

Company improved corporate e-banking and personal e-banking functions, developed different

versions of mobile banking for all mainstream operating systems, and updated the construction

of e-channel. It successfully implemented direct sales banking and Wechat banking, and kept up

the space of the industry in the business model transformation. The Company carried out the

construction of IT system groups, successfully implemented many core business systems. The

Company was ranked to the first place among other banks, in terms of surveillance of informational

technology, which was hold by CBRC.

We continued to create brand image. The Company always held the social responsibility of "equality

& honesty, sincerity for customers, caring employees, creating public benefit, participation in

environmental protection, rewards to the society". It binded operation/management and social

responsibility closely, which improved its brand popularity and social reputation. In 2014, the famous

rating agency Moody rated the Company at the Baa2 level; among top 1000 banks global , the

Company was ranked 220 by Banker referring to the tier-1 capital It received dozens of rewards,

including "Best Medium- and Small-sized Company" by Sina Finance, and "the Most Trustworthy

Bank" by Investor's Journal.

2015 is a year when Chinese economic structure is till in deep adjustment. Pressures from profit

growth and non-performing prevention and control in banking industry are still high. For these

opportunities and challenges, the Company will always persist in the principle of "prudent operation

and stable development", working hard and skillfully created more products, better service and

better performance, so as to reward shareholders, customers and the society for your trust and

support.


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Chapter Five President's Statement

In 2014, despite unsatisfactory economic situation, the Company carefully carried out various

decisions made by the board of directors, and focused on working objectives of "expanding profit

channel, updating marketing mode, strictly controlling non-performing assets and accelerating

talent training", which were specified at the beginning of the year. It operated carefully and

developed steadily so as to better achieve dynamic balance among benefit, quality and scale, and

various business indicators made at the beginning of the year were well completed. Up to Dec.31st ,

2014, the Company reached its total asset to 554. 113 billion yuan, up by 19.89% compared to that

at the beginning of the year; net profit attributed to the equity shareholders of the parent company

was 5.627 billion yuan, up by 16.10% compared to that in the same period of last year; basic EPS is

1.89 yuan, up by 0.21 yuan during the same period; non-performing loan rate is 0.89%, flush with

that at the beginning of the year; loan provision rate is 2.53%, up by 0.26% compared to that at the

beginning of the year.

In 2014, confronted with economic slowdown and intensified competition in the industry, the

Company further strengthened the construction of eight profit centers, expanded the product

system and extended business lines, which remarkably improved the customer service level and the

integrated income level. Moreover, for these opportunities and challenges, the Company developed

intermediate business in terms of bills, investment banking and custody, and effectively explored

new profit growth points. It also actively followed economic development trend, and regulated

credit structure so that the credit resource was contributed to those state encouraged and

supported real economy, high-end manufacturing industry, modern service industry and medium-

and small-sized enterprises. Thus steady growth in profit was realized.

In 2014, facing severe challenges of asset quality in banking industry, the Company firmly

promoted full-process risk management system and enhanced risk pre-management by virtue of

front, medium and background efficient linkage, so as to help customer achieve "early discovering,

early warning and early processing" towards risk. It paid close attention to the change of macro-

economic situation, inspected and eliminated risks timely and actively adjusted credit structure, so

that a batch of risk loans were effectively avoided. The Company promoted new capital accord, and

successfully launched such sub-projects as non-retail credit risk exposure modeling, retail credit risk

exposure modeling and data governance. In 2014, the risk management capacity of the Company

had passed the market test. Despite that major business regions were still engaged in absorbing

excess capacity and significant adjustment of economic structure, the asset quality was kept at a

good level.

In 2014, the Company successfully developed and listed several system, including the second

-generation payment, phase II comprehensive financial platform, asset custody, and Yinguantong

etc, so that a more efficient business supporting system was constructed for sustainable

2014 ANNUAL REPORT

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Chapter Five President's Statement（continued）

President:

development of the bank. Adhering to the trend of internet finance, the Company launched direct

sales banking, Wechat banking, corporate e-banking 5.0, personal e-banking 5.0 and mobile banking

3.0, so that the quality of business e-channel was greatly improved. After years of persistent efforts,

the technological system construction and software development capacities of the Company were

significantly improved, and the superiority in similar banks appeared gradually.

In 2014, carried by process innovation projects, the Company found problems and crucial reasons

in the frontline of handling business, comprehensively advanced various business processes and

had completed 20 process innovation projects, so that redundant procedures were effectively

reduced and handling efficiency was improved. The Company insisted on outstanding service

concept, strengthened the idea of focusing service details, and developed special theme activities in

accordance with the characteristics of mainstream customers of sales networks, so as to enhance

interaction with customers and comprehensively improve customer experience in those customer

activities.

In 2015, the Company will carry on the spirit of "industriousness for three years" and centered on

four prior work: "expanding profitability channels, upgrading marketing modes, controlling non-

performing assets and speeding up talents fostering" under the leadership of the board of director.

It will define goals, insist on direct, continuously improve work methods, reasonably master dynamic

balance between risk management and business development, accumulate comparative advantages,

and reward shareholders and the society with excellent performance and professional financial

services.


17

Chapter Six Report of the Board of Directors

I. Analysis on operations in 2014

(I) General overview

In 2014, the Company closely adhered to work line of "expanding profitability channels, upgrading

marketing modes, controlling non-performing assets and speeding up training of talents" made at

the beginning of the year, continued to optimise construction of eight profit centers, effectively

improved risk management capacity and continuously enhanced linkage between the head office

and the branches, so that various businesses were smoothly implemented, asset quality was further

improved and profitability was continuously improved. Main performances were as follows:

1. Steady growth of asset scale and coordinated development of various businesses

As of Dec.31, 2014, the total assets of the Company were RMB 554.113 billion yuan, increasing by

RMB 91.925 billion yuan compared with that on Dec. 31, 2013 and up by 19.89%; the deposits were

RMB 306.532 billion yuan, increasing by RMB 51.254 billion yuan compared with that on Dec. 31,

2013 and up by 20.08%; the loans were RMB 210.062 billion yuan, increasing by RMB 38.873 billion

yuan compared with that on Dec. 31, 2013 and up by 22.71%.

2. Profitability was gradually improved and business structure was continuously optimized

In 2014, the operating income of the Company was RMB 15.357 billion yuan, increasing by RMB

2.595 billion yuan year-on-year with a growth rate of 20.34%; the operating profit was RMB 7.027

billion yuan, increasing by RMB 0.967 billion yuan year-on-year with a growth rate of 15.95%; the

net profit attributable to the parent company was RMB 5.627 billion yuan, increasing by RMB 780

million yuan year-on-year with a growth rate of 16.10%; net fee and commission income was RMB

2.485 billion yuan, accounting for 16.18% of operating income, up by 3.49 pecent points, realizing

continuous optimization of business structure; in 2014, with non-public offering, the weighted

average net assets return ratio was 19.45%, down by 0.96 percent points; basic EPS (earnings per

share) is RMB 1.89 yuan, up by RMB 0.21 yuan.

3. Asset quality was remained stable and ability of resisting risk was enhanced

At the end of Dec. 31, 2014, NPL ratio of the Company was 0.89%, flush with that on Dec. 31,

2013; the provision coverage was 2.53%, up by 0.26 percentage points compared with that on Dec.

31, 2013. The Company kept the good quality of assets.

4. Continuously promotion of capital supplement and improvement of capital adequacy level

During the reporting period, the Company had completed non-public offering; up to Dec. 31, 2014,

the capital adequacy ratio (calculated according to "Administrative Measures for the Capital of

Commercial Banks (for Trial Implementation)") is 12.40%, up by 0.34 percentage points compared

2014 ANNUAL REPORT

18

with that on Dec. 31, 2013. The core tier-I capital adequacy ratio was 10.07% and the tier-I capital

adequacy ratio was 10.07% as well, up by 0.71 percentage points compared with that on Dec. 31,

2013.

(II) Analysis on items in the income statement

In 2014, as the strategies of eight profit centers were implemented continuously, the business

transformation in Ningbo was promoted smoothly, scale and profit of the branch were significantly

improved and source of profit becomes diverse; the net profit attributable to shareholders of the

parent company was RMB 5.627 billion yuan, up by RMB 780 million yuan and 16.10% over the

previous year.

In 2014, the operating income was RMB 15.357 billion yuan, up by 20.34%, including the net

interest income of RMB 13.355 billion yuan which increased by 18.62%, the non-interest income

of RMB 2.002 billion yuan which increased by 33.22% and incorporated net fees and commissions

income of RMB 2.485 billion, up by 53.46% and accounted for 16.18% of operating income

compared to 12.69% of the last year, mainly driven by credit card, investment banking, custody and

like businesses.

The operating expense of the Company was RMB 8.330 billion yuan, up by 24.30%. It included

operating and administrative expenses of RMB 4.925 billion yuan, up by 10.70%.The Company

continued to enhance cost management and improved efficiency of asset using. Cost-income ratio

was 32.07%, down by 2.79 percent points; provision for assets impairment loss was RMB 2.521

billion yuan, up by 70.34%; and income tax was RMB 1.373 billion yuan, up by 14.01%.

Changes of key items in the income statement


Item Year 2014 Year 2013Increase/decrease

Increase rate

Operating income 15,356,750 12,761,479 2,595,271 20.34%

Net interest income 13,354,681 11,258,689 2,095,992 18.62%

Interest income 28,175,470 23,494,890 4,680,580 19.92%

Interest expense (14,820,789) (12,236,201) (2,584,588) 21.12%

Non-interest income 2,002,069 1,502,790 499,279 33.22%

Net fees and commissions income

2,485,043 1,619,336 865,707 53.46%

Other non-interest income (482,974) (116,546) (366,428) --

Chapter Six Report of the Board of Directors（continued）


19


Increase rate

Operating expense (8,330,173) (6,701,448) (1,628,725) 24.30%

Business tax and surcharges

(866,826) (771,271) (95,555) 12.39%

Operating and administrative expense

(4,924,683) (4,448,668) (476,015) 10.70%

Assets impairment loss (2,521,150) (1,480,052) (1,041,098) 70.34%

Other operating expenses (17,514) (1,457) (16,057) 1102.06%

Operating profit 7,026,577 6,060,031 966,546 15.95%

Net non-operating income (19,685) (8,652) (11,033) 127.52%

Profit before tax 7,006,892 6,051,379 955,513 15.79%

Income tax expense (1,372,762) (1,204,114) (168,648) 14.01%

Net profit 5,634,130 4,847,265 786,865 16.23%

Attributable to equity holders of the bank

5,627,466 4,847,071 780,395 16.10%

Minority interest income 6,664 194 6,470 -


2014 ANNUAL REPORT

20

1. Net interest income

In 2014, the net interest income of the Company reached RMB 13.355 billion yuan, with a growth of

18.62% over the previous year; the Company, adapting to the interest rate liberalization reform and

increasing market competition, actively enhanced asset-liability management, optimized investment

portfolio structure, striven to increase return on asset and controlled liability cost, so as to achieve

steady growth in interest net income.



Increase rate

Interest income 28,175,470 23,494,890 4,680,580 19.92%

Loans and advances 13,333,909 12,927,921 405,988 3.14%

Due from banks 1,446,875 1,137,867 309,008 27.16%

Deposit with central bank 845,182 743,797 101,385 13.63%

Lending funds 198,402 125,860 72,542 57.64%

Financial asset held under resale agreements

2,015,193 1,664,345 350,848 21.08%

Bond investment 2,408,434 1,612,970 795,464 49.32%

Financial products and trust plans

7,927,085 5,282,008 2,645,077 50.08%

Others 390 122 268 219.67%

Interest expense 14,820,789 12,236,201 2,584,588 21.12%

Deposits from banks 4,517,578 2,222,147 2,295,431 103.30%

Borrowing funds 638,900 342,406 296,494 86.59%

Deposit from customers 6,350,864 5,219,738 1,131,126 21.67%

Financial assets sold under repurchase agreements

1,401,053 3,215,483 (1,814,430) (56.43%)

Bond issued 1,105,464 783,869 321,595 41.03%

Others 806,930 452,558 354,372 78.30%

Net interest income 13,354,681 11,258,689 2,095,992 18.62%



21

The table below shows interest income and expense, average balance and average interest rate of

interest-bearing assets and interest-bearing liabilities.


Item

Year 2014 Year 2013

Average balance

Interest income/ expense

Average yield/

cost

Average balance

Interest income/ expense

Average yield/

cost

Assets

General loans 164,909,416 11,868,950 7.20% 144,437,672 10,415,319 7.21%

Securities investment

182,008,982 10,335,520 5.68% 131,290,936 6,894,978 5.25%

Deposit with central bank

56,327,379 845,182 1.50% 49,377,918 743,797 1.51%

Due from banks and other financial institutions

70,983,178 3,660,860 5.16% 61,827,432 2,928,194 4.74%

Total interest-bearing assets

474,228,955 26,710,512 5.63% 386,933,958 20,982,288 5.42%

Liabilities

Deposits 289,139,466 6,350,864 2.20% 246,569,244 5,219,738 2.12%

Due to banks and other financial institutions

161,893,472 7,364,461 4.55% 118,999,904 5,281,930 4.44%

Bonds payable 22,627,539 1,105,464 4.89% 16,121,686 783,869 4.86%

Total interest-bearing liabilities

473,660,477 14,820,789 3.13% 381,690,834 11,285,537 2.96%

Net interest income

11,889,723 9,696,751

Net interest spread（NIS）

2.50% 2.46%

Net interest margin（NIM）

2.51% 2.51%

(1) the average balance of the interest-bearing assets and the interest-bearing liabilities refers to daily

balance on average.

(2) General loans exclude discounts and advances; due from banks and other financial institutions

Note:


2014 ANNUAL REPORT

22

The table below shows changes on interest income and interest expense due to changes on scale

and interest rate.


excludes reverse repurchase agreements; due to banks and other financial institutions excludes

repurchased assets.

(3) Net interest spread = average interest rate of interest-bearing assets–average interest rate of

interest-bearing liabilities; net interest margin=net interest income ÷ average interest-bearing assets

balance.

Year 2014 VS Year 2013

Increase(decrease) factor Increase(decrease)

Scale Interest rate Net

Assets

General loans 1,476,207 (22,576) 1,453,631

Securities investment 2,663,549 776,993 3,440,542

Deposit with central bank 104,682 (3,297) 101,385

Due from banks and other financial institutions

433,624 299,042 732,666

Changes on interest income 4,678,062 1,050,162 5,728,224

Liabilities

Customer deposits 901,189 229,937 1,131,126


1,903,874 178,657 2,082,531

Bonds payable 316,328 5,267 321,595

Changes on interest expense 3,121,391 413,861 3,535,252

Changes on net interest income 1,556,671 636,301 2,192,972

Net interest spread and net interest margin

During the reporting period, the NIS was 2.50%, down by 4 base points over the pervious year; the

NIM was 2.51%, flush with the previous year. The Company achieved stable increases of NIS and

NIM by implementing assets structure adjustment and interest rates management.



23

(1) Interest income

In 2014, the Company achieved the interest income of RMB 28.175 billion yuan, increasing by

19.92% over the previous year. It was mainly due to expansion of interest-bearing assets and

optimization of structure.

Net loan interest income (excluding discounts and advances)

In 2014, the interest income from general loans (excluding discounts and advances) achieved RMB

11.869 billion yuan, increasing by RMB 1.454 billion yuan and up by 13.96%. In 2014, the average

yield from general loans was 7.20%, down by 0.01 percentage points.

The table below shows average balance, interest income and average yield of each part of general

loans.

Securities investment interest income

In 2014, the interest income from securities investment achieved RMB 10.336 billion yuan,

increasing by RMB 3.441 billion yuan. The average yield from securities investment reached 5.68%,

increased by 0.43 percentage points over the previous year.

Interest income from due from banks and other financial institutions

In 2014, the interest income from due from banks and other financial institutions achieved RMB

3.661 billion yuan, increasing by RMB 0.733 billion yuan over the previous year. The average yield

from due from banks and other financial institutions reached 5.16%, up by 0.42 percentage points

over the previous year.


Year 2014 Year 2013

Average balance

Interest income

Average yield

Average balance

Interest income

Average yield

Corporate loans

119,554,583 8,386,049 7.01% 110,047,617 7,863,801 7.15%

Personal loans

45,354,833 3,482,901 7.68% 34,390,056 2,551,518 7.42%

Total loans 164,909,416 11,868,950 7.20% 144,437,673 10,415,319 7.21%


2014 ANNUAL REPORT

24


(2) Interest expense

In 2014, the interest expense reached RMB 14.821 billion yuan, up by RMB 2.585 billion yuan and

21.12% over the previous year. It was mainly due to expanded scale of liability with interest, as well

as increase in customer deposits and interest rate of inter-bank liabilities.

Interest expense for customer deposits

In 2014, the interest expense for customer deposits reached RMB 6.351 billion yuan, up by RMB

1.131 billion yuan and 21.67% over the previous year.

The table below shows average balance, interest expense and average yield of corporate deposits

and personal deposits.

Interest expense for due to banks and other financial institutions

In 2014, the interest expense for due to banks and other financial institutions reached RMB 7.364

billion yuan, up by RMB 2.083 billion yuan over the previous year. The average cost was 4.55%,

down by 0.11 percentage points over the previous year.

Interest expense for issued liabilities

In 2014, the interest expense for issued liabilities reached RMB 1.105 billion yuan, up by RMB 0.321

billion yuan over the previous year. The average cost was 4.89%, up by 0.03 percentage points over

the previous year.

Year 2014 Year 2013

Average balance

Interest expense

Average cost

Average balance

Interest expense

Average cost

Corporate deposits

Demand 98,414,249 839,333 0.85% 85,059,640 601,528 0.71%

Time 119,690,426 3,604,827 3.01% 101,718,494 3,076,896 3.02%

Subtotal 218,104,676 4,444,160 2.04% 186,778,134 3,678,424 1.97%

Personal deposits

Demand 20,363,105 96,598 0.47% 16,695,611 74,950 0.45%

Time 50,671,685 1,810,106 3.57% 43,095,499 1,466,364 3.40%

Subtotal 71,034,790 1,906,704 2.68% 59,791,110 1,541,314 2.58%

Total 289,139,466 6,350,864 2.20% 246,569,244 5,219,738 2.12%



25

Net fee and commission income



2. Non-interest income

During the reporting period, the non-interest income achieved RMB 2.002 billion yuan with a growth

of 33.22%, including the net fee and commission income of RMB 2.485 billion yuan with a growth of

53.46%.

Composition of non-interest income

Item Year 2014 Year 2013 Increase/Decrease Increase rate

Fee and commission income 2,696,649 1,795,828 900,821 50.16%

Less: Fee and commission expense

211,606 176,492 35,114 19.90%


2,485,043 1,619,336 865,707 53.46%

Other non-interest income (482,974) (116,546) (366,428) --

Total 2,002,069 1,502,790 499,279 33.22%


Settlement business 205,201 172,575 32,626 18.91%

Bank cards business 1,234,438 624,675 609,763 97.61%

Agency services business 884,628 762,751 121,877 15.98%

Guarantees business 123,075 77,081 45,994 59.67%

Commitment business 57,874 54,333 3,541 6.52%

Custody business 119,658 35,658 84,000 235.57%

Consultancy business 11,938 56,417 (44,479) -78.84%

Others 59,837 12,338 47,499 384.98%

Fee and commission income 2,696,649 1,795,828 900,821 50.16%

Less: Fee and commission expense

211,606 176,492 35,114 19.90%


2,485,043 1,619,336 865,707 53.46%


2014 ANNUAL REPORT

26


In 2014, the Company took advantages of its integrated finance service to adjust the direction of

business development, and continued to promote transformation and innovation of intermediate

business. The income from bank cards reached RMB 1.234 billion yuan, up by 0.610 billion yuan and

97.61% over the previous year, mainly due to increased income from settlement; the income from

guarantees business was RMB 0.123 billion yuan, up by 59.67%, mainly due to significant growth

of income in guarantee business; the income from custody business was 0.120 billion yuan, up by

235.57%, mainly due to significant growth in securities and fund custody businesses; and income

from other businesses was 0.060 billion yuan, up by 384.98%, mainly due to rapid growth of income

from management business of fund subsidiary.

3. Business and administrative expenses

In 2014, the Company strictly implemented cost control, continuously developed the standardization

and refining level of financial management, optimized allocation of resource, improved business

efficiency and effectively improved the significance of cost efficiency and expense on business

development; all year around, the controlled cost income ratio was 32.07%, down by 2.79 percent

points.

The business and administrative expenses was RMB 4.925 billion yuan, up by 10.70%, and growth

rate was significant lower than that of the previous year, including employee expense up by 4.12%

and business expense up by 17.82%, mainly due to expansion in sales network and business scale.

The table below shows the composition of business and administrative expenses during the

reporting period.


Staff costs 2,524,043 2,424,139 99,904 4.12%

Business expenses 1,938,442 1,645,218 293,224 17.82%

Depreciation of fixed assets 296,508 245,341 51,167 20.86%

Amortization of long-term deferred expenses

98,324 78,687 19,637 24.96%

Amortization of intangible assets

27,130 19,612 7,518 38.33%

Taxes 40,236 35,671 4,565 12.80%

Total 4,924,683 4,448,668 476,015 10.70%



27

4. Assets impairment loss

In 2014, the assets impairment loss was RMB 2.521 billion yuan, up by RMB 1.041 billion yuan and

70.34% over the previous year. Main reasons: 1. The total loans grew stably, and the Company

kept withdrawing the provision for assets impairment loss with the principle of conservatism and

prudence; 2. The Company properly increased the provision for loan impairment loss on the basis

of growth and structural adjustment of various business assets and self-business development

strategy, and also promoted the capability of risk prevention.

(III) Analysis of the balance sheet

1. Assets



Loan impairment loss 2,420,150 1,319,252 1,100,898 83.45%

Investment impairment loss of receivables

100,000 150,000 (50,000) (33.33%)

Bad debt reserves 1,000 10,800 (9,800) (90.74%)

Total 2,521,150 1,480,052 1,041,098 70.34%

Item

31 Dec. 2014 31 Dec. 2013 Changes 31 Dec. 2012

AmountPro-

portionAmount

Pro-portion

Amount

Proportion (percent-

age point)

AmountPro-

portion

Cash and balances with central bank

70,953,938 12.80% 62,194,816 13.46% 8,759,122 (0.66) 45,493,814 12.30%

Due from other banks

30,447,600 5.49% 38,964,591 8.43% (8,516,991) (2.94) 33,222,961 8.98%

Precious metals

- - 33,159 0.01% (33,159) (0.01) - -

Lending 2,866,596 0.52% 548,000 0.12% 2,318,596 0.40 6,667,509 1.80%

Financial assets at fair value through profit and loss

8,878,979 1.60% 1,178,908 0.26% 7,700,071 1.34 1,784,415 0.48%

Derivative financial assets

1,293,140 0.23% 2,110,285 0.46% (817,145) (0.23) 877,308 0.24%


2014 ANNUAL REPORT

28

Item


AmountPro-

portionAmount

Pro-portion

Amount

Proportion (percent-

age point)

AmountPro-

portion

Financial assets purchased under resale agreements

17,079,001 3.08% 39,537,850 8.55% (22,458,849) (5.47) 35,712,105 9.65%

Interest receivables

3,015,047 0.54% 1,972,905 0.43% 1,042,142 0.11 1,296,234 0.35%

Loans and advances

204,749,878 36.97% 167,302,170 36.18% 37,447,708 0.79 142,564,629 38.55%

Financial assets available-for- sales

120,109,026 21.68% 90,368,707 19.55% 29,740,319 2.13 57,215,151 15.47%

Held-to-maturity investment

16,569,101 2.99% 15,949,957 3.45% 619,144 (0.46) 16,987,697 4.59%

Investment receivables

71,554,844 12.91% 36,083,540 7.81% 35,471,304 5.10 22,306,412 6.03%

Investment real estate

16,596 0.00% 16,609 0.00% (13) (0.00) 14,738 0.00%

Fixed assets 3,352,019 0.60% 2,392,068 0.52% 959,951 0.08 2,397,820 0.65%

Intangible assets

208,642 0.04% 147,596 0.03% 61,046 0.01 87,898 0.02%

Deferred income tax assets

769,245 0.14% 867,712 0.19% (98,467) (0.05) 385,889 0.10%

Other assets 2,248,966 0.41% 2,519,156 0.55% (270,190) (0.14) 2,928,266 0.79%

Total assets 554,112,618 100% 462,188,029 100% 91,924,589 0.00 369,942,846 100%

(1) Loans and advances

As of 31 December 2014, the loans and advances reached RMB 210.062 billion yuan and the net

value was RMB 204.750 billion yuan after deducting the provision for loan loss of RMB 5.312 billion

yuan. It increased by 22.38%, accounting for 36.97% of the total assets, and up by 0.79 percentage

points over the previous year.



29

Corporate loan

As of Dec.31, 2014, the corporate loan was RMB 127.804 billion yuan, accounting for 60.84%

of the total loans and advances, and down by 6.20 percentage points over the previous year. In

2014, the Company enhanced adjustment of customer and product structure so as to meet multi-

levelfinancing demand of customers and increase loan support to small, micro and rural realted

enterprises.

Discount

As of Dec.31, 2014, the discounts achieved RMB 9.522 billion yuan, accounting for 4.53% of the

total loans and advances, and up by 2.67 percentage points compared with that of 31 December

2013. The Company, depending on credit loan schedule, properly increased the amount of notes

discounted and improved the return of notes discounted.

Personal loan

As of Dec.31, 2014, the personal loans totalized RMB 72.735 billion yuan, accounting for 34.63%

of the total loans and advances, and up by 3.53 percentage points. In 2014, with the changes in

economic situation, the Company, on the basis of strengthening regular customer base of personal

loan, futher increased personal consumption loans and credit card loans.


ItemYear 2014 Year 2013

Amount Proportion Amount Proportion

Corporate loans and advances

127,804,398 60.84% 114,769,741 67.04%

Loans 123,301,697 58.70% 110,332,334 64.45%

Trade financing 4,502,701 2.14% 4,437,407 2.59%

Discounts 9,522,435 4.53% 3,182,740 1.86%

Personal loans and advances

72,735,349 34.63% 53,237,185 31.10%

Personal consumption loans 66,652,085 31.73% 46,849,314 27.37%

Personal operation loans 4,492,093 2.14% 4,664,492 2.72%

Personal housing loans 1,591,171 0.76% 1,723,379 1.01%

Total loans 210,062,182 100.00% 171,189,666 100.00%


2014 ANNUAL REPORT

30



Situation of ten financial bonds held with the highest face value

(2) Securities investment

Securities investments include financial assets held for trading, available-for-sale financial assets,

held-to-maturity investments and investment receivables.

Investment structure divided upon purpose

Item 31 Dec. 2014 31 Dec. 2013

Amount Proportion Amount Proportion


8,878,979 4.09% 1,178,908 0.82%

Available-for-sale financial assets

120,109,026 55.32% 90,368,707 62.94%

Held-to-maturity investments

16,569,101 7.63% 15,949,957 11.11%

Investment receivables 71,554,844 32.96% 36,083,540 25.13%

Total 217,111,950 100.00% 143,581,112 100.00%

CATEGORYBALANCE OF

PAR VALUEINTEREST

RATE％DATE OF

MATURITYDEPRECIATION

RESERVE

Financial bond of 2014 530,000 4.18 2021-11-20 -








Financial bond of 2014 230,000 4.08 2019 -11-20 -




31

(3) Derivative financial instruments held at the end of the reporting periodUnit: (RMB) Thousand

Derivative financial instruments

31 Dec. 2014

Contract/nominal amount

Fair value of assets Fair value of liabilities

Foreign exchange forwards

15,740,563 139,832 (30,776)

Currency swap 165,780,139 744,101 (810,252)

Interest rate swap 230,561,606 244,848 (349,760)

Currency swap 147,036 - (1,914)

Option contract 2,344,628 164,359 (110,786)

Total 414,573,972 1,293,140 (1,303,488)

During the reporting period, the following derivative financial instruments were used in transactions:

Swap Contract: Swap contract refers to a commitment between two parties to exchange cash flow

within an agreed period. The Company mainly adopted Interest Rate Swaps and Currency Interest

Rate Swaps.

In an Interest Rate Swap, both parties agrees to pay interest to each other at an agreed interest

rate within an agreed period. Both parties, as based on the same currency and the same amount,

will exchange a fixed interest rate for a floating interest rate, or exchange one floating interest

rate for another. By the end of the agreed period, the interest will be paid according to the agreed

interest rate.

Currency Interest Rate Swap refers to the exchange based on different currencies and different

interest rates. The principal will be retrieved at the expiry date of the contract.

Forward Contract: In a forward contract, a financial product will be purchased or sold at an agreed

price on an agreed date in the future.

Option contract: an option refers to the right to sell or purchase a certain quantity of subject

matters at a specific price (strike price) within a specific period.

Nominal amount of derivative financial instruments in the balance sheet was regarded as a basis

to comparing with fair value assets or liabilities in the balance sheet, which did not represent the

cash flow in the future or the fair value at present. Therefore, it should not be used to reflect the

credit risk or market risk of the Company. With the fluctuation of foreign exchange rate and market

interest rate, as related to the contract terms of derivative financial instruments, the evaluated


2014 ANNUAL REPORT

32

value of derivative financial instruments may have positive (assets) or negative (liabilities) effect on

the bank. Such effect may vary from time to time.

(4) Interest receivables and bad debt provision on- and off-balance sheet

(5) Debt assets and provision for impairment

At the end of 31 Dec. 2014, the debt assets was RMB 90 million yuan and the net debt assets were

valued RMB 90 million yuan without deducting the provision for impairment.

2. Liabilities

As of 31 December 2014, the liabilities totalized RMB 519.948 billion yuan, up by RMB 83282 billion

yuan and up 19.07% over the previous year. It was mainly due to increase of deposits and due to

other banks.



ITEM31 DEC.

2013

INCREASE/DECREASE

BY

31 DEC. 2014

BALANCE OF BAD

DEBT RESERVE

WITHDRAWL METHOD

Interest receivables on the balance sheet

1,972,905 1,042,142 3,015,047 -Individually determined

Interest receivables off the balance sheet

185,747 40,139 225,886 - -

Land, housing and buildings 89,897

Others -

Subtotal 89,897

Provision for debt assets impairment loss -

Net value of debt assets 89,897



33


Item


AmountPro-

portionAmount

Pro-portion

AmountProportion

(percent-age point)

AmountPro-

portion

Borrowings from central bank

- - 200,000 0.05% (200,000) (0.05) - -

Due to other banks and financial institutions

86,634,335 16.66% 89,986,906 20.61% (3,352,571) (3.95) 44,543,618 12.81%

Loans from other banks and financial institutions

14,071,981 2.71% 13,015,003 2.98% 1,056,978 (0.27) 22,203,240 6.38%


1,272,100 0.24% - - 1,272,100 0.24 - -

Derivative financial liabilities

1,303,488 0.25% 2,145,671 0.49% (842,183) (0.24) 859,522 0.25%

Assets sold under repurchase agreements

28,155,132 5.41% 37,139,833 8.51% (8,984,701) (3.10) 55,458,492 15.94%

Deposits 306,531,829 58.97% 255,278,327 58.45% 51,253,502 0.52 207,577,270 59.69%

Wages and salaries payable

1,098,768 0.21% 1,018,894 0.23% 79,874 (0.02) 624,031 0.18%

Taxes payable 795,134 0.15% 683,906 0.16% 111,228 (0.01) 599,694 0.17%

Interests payable

5,587,627 1.07% 4,460,045 1.02% 1,127,582 0.05 2,799,208 0.80%

Bond payable 50,655,391 9.74% 18,466,246 4.23% 32,189,145 5.51 10,474,150 3.01%

Deferred income

29,496 0.01% 48,886 0.01% (19,390) (0.00) - -

Deferred income tax liabilities

3,871 0.00% 3 0.00% 3,868 0.00 - -

Other liabilities 23,809,254 4.58% 14,222,421 3.26% 9,586,833 1.32 2,686,661 0.77%

Total liabilities

519,948,406 100% 436,666,141 100% 83,282,265 0.00 347,825,886 100%


2014 ANNUAL REPORT

34


Customer deposits

The Company always focused on expanding deposits which showed stable growth. As of 31

December 2014, the customer deposits totalized RMB 306.532 billion yuan, up by RMB 51.254

billion yuan and 20.08%. It accounted for 58.97% of the total liabilities of the Company.

The table below shows customer deposits categorized upon product types and customer types at

the end of 31 December 2014.

As of 31 December 2014, the corporate deposits accounted for 75.79% of the total customer

deposits, down by 0.16 percentage points over the previous year; the personal deposits accounted

for 24.21% of the total customer deposits, up by 0.16 percentage points over the previous year.

As of 31 December 2014, the demand deposits accounted for 40.17% of the total customer

deposits, down by 2.54 percentage points over the previous year. As important parts, the corporate

demand deposits accounted for 33.09% of the customer deposits, down by 2.71 percentage

points; the personal demand deposits accounted for 7.08% of the customer deposits, up by 0.17

percentage points over the previous year.

Item Year 2014 Year 2013

Balance Proportion Balance Proportion

Corporate deposits

Demand 101,446,377 33.09% 91,387,776 35.80%

Time 130,879,244 42.70% 102,491,104 40.15%

Subtotal 232,325,621 75.79% 193,878,880 75.95%

Personal deposits

Demand 21,696,287 7.08% 17,640,425 6.91%

Time 52,509,921 17.13% 43,759,022 17.14%

Subtotal 74,206,208 24.21% 61,399,447 24.05%

Total 306,531,829 100.00% 255,278,327 100.00%



35

3. Shareholders' equity

(IV) Analysis of assets quality

In 2014, the Company further enhanced comprehensive risk management, developed the level of

risk management and improved risk resisiting ability; meanwhile, the Company intensified disposal

of bad debts in order to keep asset quality stable.

At the end of December 2014, the loans totalized RMB 210.062 billion yuan, up by RMB 38.873

billion yuan and up by 22.71% over the previous year. The non-performing loan ratio was 0.89%,

flat compared with the previous year. Loan provision coverage reached 2.53%, increased by 0.26

percentage points over the previous year.


Item


AmountPro-

portionAmount

Pro-portion

AmountProportion

(percent-age point)

AmountPro-

portion

Share capital 3,249,829 9.51% 2,883,821 11.30% 366,008 (1.79) 2,883,821 13.04%

Capital reserve 10,598,201 31.02% 7,889,125 30.91% 2,709,076 0.11 7,889,125 35.67%

Other comprehensive income

309,130 0.90% (726,252) (2.85%) 1,035,382 3.75 10,131 0.05%

Surplus reserve 2,531,957 7.41% 1,970,844 7.72% 561,113 (0.31) 1,486,303 6.72%

General risk reserve

4,054,719 11.87% 2,859,911 11.21% 1,194,808 0.66 1,499,934 6.78%

Retained profits 13,347,261 39.08% 10,629,244 41.65% 2,718,017 (2.57) 8,347,646 37.74%

Equity attributable to shareholders of the bank

34,091,097 99.79% 25,506,693 99.94% 8,584,404 (0.15) 22,116,960 100%

Minority interest

73,115 0.21% 15,195 0.06% 57,920 0.15 - -

Total shareholders' equity

34,164,212 100% 25,521,888 100% 8,642,324 0.00 22,116,960 100%


2014 ANNUAL REPORT

36

Quality of loan assets at the end of the reporting period


Five-tier classification

31 Dec. 2014 31 Dec. 2013 Changes

Loans & advances

PercentageLoans &

advancesPercentage

Increase/decrease

Percentage (Percentage

point)

Subtotal of performing loans:

208,199,352 99.11% 169,664,445 99.11% 38,534,907 0.00

Pass 204,479,949 97.34% 167,855,077 98.05% 36,624,872 (0.71)

Special mention

3,719,403 1.77% 1,809,368 1.06% 1,910,035 0.71

Subtotal of non-performing loans:

1,862,830 0.89% 1,525,221 0.89% 337,609 (0.00)

Substandard 543,229 0.26% 515,858 0.30% 27,371 (0.04)

Doubtful 881,732 0.42% 674,339 0.39% 207,393 0.03

Loss 437,869 0.21% 335,024 0.20% 102,845 0.01

Total loans 210,062,182 100.00% 171,189,666 100.00% 38,872,516 0.00



37

Industry Year 2014

Amount Proportion

Agriculture, forestry, animal husbandry, fishing 949,376 0.45%

Mining 330,802 0.16%

Manufacturing 39,483,149 18.80%

Production & supply of power, gas, water 2,091,225 1.00%

Construction 8,940,251 4.26%

Transportation, storage, mailing 3,440,540 1.64%

Information transfer, computer service and software 1,784,032 0.85%

Commerce 27,261,689 12.98%

Hotel, restaurant 1,177,285 0.56%

Finance 921,559 0.44%

First-hand property mortgage loan for legal persons 8,056 0.00%

Loans for corporate operational property 6,217,764 2.96%

Leasing and commercial service 19,475,651 9.27%

Scientific research, technology service and geological exploitation

414,290 0.20%

Water resource, environment and public facilities management and investment

8,116,007 3.86%

Real estate development 10,751,252 5.12%

Loans for urban construction 2,270,192 1.08%

Resident service and other services 295,065 0.14%

Education 888,292 0.42%

Health, social security and welfare 337,715 0.16%

Culture, sports and entertainment 458,515 0.22%

Public management and social organization 1,714,126 0.82%

Personal loans 72,735,349 34.61%

Total 210,062,182 100.00%

Loan proportion in different industries at the end of the reporting period



2014 ANNUAL REPORT

38




Loan proportion in different areas at the end of the reporting period

Loan proportion for different guarantees at the end of the reporting period

Loans for top 10 customers at the end of the reporting period

Region 31 Dec. 2014

Amount Proportion

Zhejiang Province 131,885,930 62.79%

Including: Ningbo 103,865,395 49.45%

Shanghai 18,526,749 8.82%

Jiangsu Province 42,169,855 20.07%

Guangdong Province 10,027,060 4.77%

Beijing 7,452,588 3.55%

Total amount of loans and advances 210,062,182 100.00%

Guarantee type 31 Dec. 2014

Amount Proportion

Credit Loan 60,609,001 28.85%

Guarantee loan 56,585,732 26.94%

Mortgage loan 77,827,511 37.05%

Pledge loan 15,039,938 7.16%

Total amount of loans and advances 210,062,182 100.00%

Industry Loan Balance Proportion to net capital

Public administration, social security and social organization

1,071,200 2.56%

Loans for real estate development 600,000 1.43%

Water resource, environment and public facilities management

520,409 1.24%

Mining 519,600 1.24%

Water resource, environment and public facilities management

510,000 1.22%

Leasing and commercial service 485,000 1.16%

Loans for real estate development 409,332 0.98%

Construction 401,500 0.96%



Total 5,315,041 12.70%

Net capital 41,844,020



39



Loans divided upon overdue limit

Provision and written-off of bad debts

The Company adopted two methods of assessing impairment losses on loans at the balance sheet

date: individual assessment and portfolio assessment.

Loans which were considered individually significant were assessed individually for impairment. If

there was any objective evidence indicating that a loan was impaired, the impairment losses amount

would be measured as the difference between the carrying amount of the loan and its discounted

value of estimated future cash flows recoverable through profit or loss of the current period.

Loans which were considered individually insignificant and for which there was no objective evidence

showing that an impairment has incurred according to individual assessments were grouped in a

pool of loans with similar credit risk characteristics for the purpose of impairment testing. Based on

the results of the testing, the Company would determine allowances for impairment losses on loans

assessed on a portfolio basis.

31 Dec. 2014 31 Dec. 2013

AmountProportion to

all the loansAmount

Proportion to all the loans

Overdue within 3 months 1,940,271 0.92% 440,872 0.26%

Overdue for 3 months to 1 year 1,352,866 0.64% 941,043 0.55%

Overdue for more than 1 year and within 3 years

750,394 0.36% 293,000 0.17%

Overdue for more than 3 years 18,237 0.01% 39,299 0.02%

Total overdue loans 4,061,768 1.93% 1,714,214 1.00%

Item Year 2014 Year 2013 Year 2012

Balance at the beginning of the year 3,887,496 3,052,914 2,003,177

Provision 2,420,150 1,319,252 1,076,350

Reversal 29,110 645 6,359

Including: Recoveries of loans and advances written-off previously

29,110 645 6,359

Written-off (983,145) (457,033) (15,469)

Transferred in from decreased loan interests

(41,307) (28,282) (17,503)

Balance at the end of the year 5,312,304 3,887,496 3,052,914


2014 ANNUAL REPORT

40

(V) Analysis of the cash flow statement

The net cash inflows from operating activities were RMB 22.776 billion yuan, including the cash

inflows of RMB 93.610 billion yuanwith a decrease of RMB 8.734 billion yuan. It was mainly because

of the decrease of customer deposits and due to other banks. The cash outflows were RMB 70.834

billion yuan, up by RMB 7.227 billion yuan. It was mainly due to decrease of due from other banks

and lending to other financial institutions.

The net cash inflows from investment activities were RMB -62.631 billion yuan, including the cash

inflows of RMB 717.990 billion yuan with a growth of 221.733 billion yuan over the previous year.

It was mainly due to increase of cash inflows from returns on investment. The cash outflows were

RMB 780.622 billion yuan, up by RMB 242.833 billion yuan. It was mainly due to increase of cash

outflows for investment.

The net cash inflows from financing activities were RMB 33.325 billion yuan. As a part of them,

the cash inflows were RMB 40.307 billion yuan and most of which were cash received from issued

bonds. The cash outflows were RMB 6.982 billion yuan. It was mainly due to distribution of common

stock dividends and payment of issued bond interest.


Item Year 2014 Year 2013 Changes

Subtotal of cash inflows from operating activities

93,610,423 102,344,549 (8,734,126)

Subtotal of cash outflows from operating activities

70,834,126 63,607,430 7,226,696

Net cash flow from operating activities 22,776,297 38,737,119 (15,960,822)

Subtotal of cash inflows from investment activities

717,990,390 496,257,394 221,732,996

Subtotal of cash outflows from investment activities

780,621,802 537,788,797 242,833,005

Net cash flow from investment activities (62,631,412) (41,531,403) (21,100,009)

Subtotal of cash inflows from financing activities

40,307,252 8,001,500 32,305,752

Subtotal of cash outflows from financing activities

6,982,065 1,230,705 5,751,360

Net cash flow from financing activities 33,325,187 6,770,795 26,554,392

Net increase of cash and cash equivalents

(6,541,365) 3,904,725 (10,446,090)



41

(VI) Segment analysisUnit: (RMB) Thousand

Year 2014Corporate

bankingPersonal banking

Capital banking

Others Total

Net external interest income 4,294,951 1,877,664 7,182,066 - 13,354,681

Net internal interest income 2,362,392 510,396 (2,872,788) - -

Net fee and commission income 1,299,059 1,152,404 33,580 - 2,485,043

Investment gains - - 156,004 8,937 164,941

Gains from fair value changes - - 148,693 (13) 148,680

Foreign exchange gains 168,512 - (1,029,904) 31,257 (830,135)

Other operating income/expense - - - 16,026 16,026

Operating tax and surcharge 524,141 275,944 66,069 672 866,826

Business and administrative fees 2,235,708 1,182,300 1,503,796 2,879 4,924,683

Assets impairment loss 2,003,016 418,134 100,000 - 2,521,150

Operating profit 3,362,049 1,664,086 1,947,786 52,656 7,026,577

Net non-operating income - - 5,964 (25,649) (19,685)

Total profits 3,362,049 1,664,086 1,953,750 27,007 7,006,892

Total assets 134,890,347 73,248,241 345,216,856 757,174 554,112,618

Total liabilities 258,162,341 76,602,125 184,901,633 282,307 519,948,406

Supplementary information: 　　　　　

Capital expenditure 276,283 150,028 708,072 1,551 1,135,934

Depreciation and amortization expenses

284,662 149,866 186,573 365 621,466

Year 2013Corporate


Capital banking

Others Total

Net external interest income 4,858,210 1,317,310 5,083,169 - 11,258,689

Net internal interest income 1,458,916 367,064 (1,825,980) - -

Net fee and commission income 1,079,056 583,734 (43,454) - 1,619,336

Investment gains - - 120,799 - 120,799

Gains from fair value change - - (154,182) - (154,182)

Foreign exchange gains 138,119 - (252,497) - (114,378)

Other operating income/expense - - - 29,758 29,758

Operating tax and surcharge 545,997 171,432 53,842 - 771,271

Business and administrative fees 2,505,438 789,796 1,153,434 - 4,448,668

Assets impairment loss 1,236,265 93,787 150,000 - 1,480,052



2014 ANNUAL REPORT

42

(XII) Others Off-balance sheet items that have significant influence on the operating results


Year 2013Corporate


Capital banking

Others Total

Net non-operating income - - 6,000 (14,652) (8,652)

Total profits 3,246,601 1,213,093 1,576,579 15,106 6,051,379

Total assets 116,377,028 53,825,872 291,271,872 713,257 462,188,029


Supplementary information: 　　　　　



371,838 125,193 32,438 15 529,484

Item 31 Dec. 2014 31 Dec. 2013 31 Dec. 2012

Main off-balance risk assets

L/C issued 15,629,215 24,015,051 11,059,374

Bank acceptances 50,545,875 40,924,641 38,320,554

L/G issued 13,480,670 8,074,604 3,042,824

Loan commitments 52,232,448 31,404,156 25,675,100

Capital commitments 393,977 541,402 263,659

Operating lease commitment 1,597,734 1,481,522 1,369,414

Pledge of assets commitment 28,280,000 30,033,700 26,289,000



43

Explanations on fair value calculation of the Company:

(1) Financial assets designated at fair value through profit or loss have two sub-categories: financial

assets held for trading and those designated at fair value through profit or loss at inception.

Financial assets held for trading include financial assets and derivative financial instruments held for

selling in the short term. All profit and loss of these financial assets and all changes designed at fair

value at the end shall be recorded as investment income. When they are disposed, the difference

between the fair value and the initial amount shall be recorded as investment profit and the profit

and loss of fair value changes shall be correspondingly adjusted.

(2) Available-for-sale financial assets are non-derivative financial assets which are held for sale or

are not classified in any of three categories including loans and investment receivables, held-to-

maturity investment and financial assets designated at fair value through profit or loss. After initial

recognition, available-for-sale financial assets are subsequently measured at fair value. Unrealized

income from fair value change of such financial assets shall be counted into the capital reserves

(other capital reserves) before termination or impairment. On the termination or impairment of

such financial assets, the accumulated fair value, as previously recorded in capital reserves, shall


Fair value

Item31 Dec.

2013

Income/loss due to change of fair value

Accumulated Fair value

changes entered into

equity

Withdrawal for

impairment

31 Dec. 2014

Financial assets designated at fair value through profit or loss

1,178,908 92,983 - - 8,878,979

Derivative financial assets 2,110,285 (744,448) - - 1,293,140

Available-for-sale financialassets

90,355,457 - 385,884 - 120,095,776

Subtotal of financial assets 93,644,650 (651,465) 385,884 - 130,281,145

Financial liabilities at fair value through profit and loss

- 12,201 - - (1,272,100)

Derivative financial liabilities (2,145,671) 787,957 - - (1,303,488)

Subtotal of financial liabilities

(2,145,671) 800,158 - - (2,575,588)


2014 ANNUAL REPORT

44

be transferred into the income statement. The interest income of available-for-sale financial assets

shall be entered into the income statement as well.

(3) Financial liabilities designated at fair value through profit or loss have two sub-categories:

financial liabilities held for trading and those designated at fair value through profit or loss at

inception. Financial liabilities held for trading include financial liabilities and derivative financial

instruments held for selling. They are recognized at fair value at inception and recorded in the

income statement. Costs of these financial assets and all changes designed at fair value at the end

shall be recorded in the income statement. When they are disposed, the difference between the fair

value and the initial amount shall be recorded as investment profit and the profit and loss of fair

value changes shall be correspondingly adjusted.

(4) Investment real estate is held to generate rental income or earn capital gains or both. Since

there is an active local trading market of real estate, the Company is able to obtain the market

prices of the identical or similar real estates and other relevant information from the market, so

as to estimate the fair value of the investment real estate. Therefore investment real estate of the

Company are measured at fair value. Initial value of purchased or self-constructed investment real

estate shall be confirmed at its cost. Investment real estate converted from a fixed asset is initially

measured at fair value on the date of conversion. Differences are recorded as capital reserve

(other capital reserve) if the fair value is higher than the carrying value, and recorded in the income

statement on the contrary. Thereafter, investment real estate is measured at fair value on each

balance sheet date and changes on fair value are taken into the income statement.



45


Foreign currency financial assets

Item31 Dec.

2013

Income/loss due to change of fair value

Accumulated fair value changes

entered into equity

Withdrawal for

impairment

31 Dec. 2014

Financial assets

Cash and balances with central banks

547,601 - - - 658,854

Due from other banks

1,939,266 - - - 1,991,106

Lending funds - - - - 266,686


167,194 779,128 - - 946,322

Loans and advances

4,892,186 - - (56,363) 10,790,780

Investment receivables

- - - - 62,020

Other financial assets

3,322 - - - 2,833

Subtotal of financial assets

7,549,569 779,128 - (56,363) 14,718,601

Financial liabilities　　　　　


15,849,422 - - - 12,518,450

Borrowings 9,172,023 - - - 10,217,481


53,040 144,439 - - 197,479

Deposit taking 7,388,732 - - - 14,481,152

Other financial liabilities

129,711 - - - 321,228

Subtotal of financial liabilities

32,592,928 144,439 - - 37,735,790


2014 ANNUAL REPORT

46

Item Year 2014 Year 2013Increase/

decrease byMain causes

Fee and commission income

2,696,649 1,795,828 50.16%Rapid development of intermediate business

Investment gains 164,941 120,799 36.54%Increase of gains from

investment

Gains from fair value changes

148,680 (154,182)Negative in the same period of

last year

Increase in fair value of trading financial

instrument

Foreign exchange gains (830,135) (114,378)Negative in the same period of

last year

Influence of exchange rate fluctuation on

exchange gain or loss

Assets impairment loss 2,521,150 1,480,052 70.34%Increase in loan provision

withdrawing

Item31 Dec.

201431 Dec.

2013Increase/


Lending 2,866,596 548,000 423.10%Increase in due from

banks and assets of other financial institutions

Financial assetsat fair value through profit and loss

8,878,979 1,178,908 653.15%Increase in investment

scale

Derivative financial assets 1,293,140 2,110,285 (38.72%)Change in estimated fair

value

Finanacial assets held under resale agreement

17,079,001 39,537,850 (56.80%)Decrease in the scale of

redemptory notes for sales

Interest receivable 3,015,047 1,972,905 52.82%Increase in interest-

bearing assets


120,109,026 90,368,707 32.91%Increase in available-for-

sale financial assets

Bond investment receivable

71,554,844 36,083,540 98.30%Increase in asset

receivable management plan

Fixed assets 3,352,019 2,392,068 40.13% Increase in fixed assets

Intangible assets 208,642 147,596 41.36%Increase in intangible

assets

(VIII) Key items and financial indicators with over 30% changes and main causes




47

II. Investment analysis

(I) External equity investment

1. External investment

ItemJan.-Dec.

2014Jan.-Dec.

2013Increase/



1,303,488 2,145,671 (39.25%)Change in estimated fair

value

Bonds payable 50,655,391 18,466,246 174.31%Increased in interbank deposit receipt issued

Capital reserve 10,598,201 7,889,125 34.34%Private placement capital

stock premium in 2014

Other comprehensive incomes

309,130 (726,252)Negative in the same period of

last year

Increase in investment revaluation reserve of

available-for-sale financial assets

General risk reserve 4,054,719 2,859,911 41.78%Increase in provision of

general risk reserve


Item 31 Dec. 2014

31 Dec. 2013

Proportion of shares

of invested companies held by the Company

Main business

China UnionPay

13,000 13,000 0.34%

Establishing and running a nationwide unified cross-bank network of information exchange for bankcards; providing advanced electronic payment technology and specialized services in regard to cross-bank information exchange for bankcards; conducting technology innovation in bankcard business; managing and operating the logo of "Unionpay"; stipulating business rules and technical standards on cross-bank transactions with bankcards; coordinating and arbitrating disputes occurred in bankcard cross-bank transactions; organizing training program and seminars and carrying out international exchange; providing consulting and research services and other related services approved by the PBC.


2014 ANNUAL REPORT

48

2. Securities investment

During the reporting period, the Company had no securities investment.

(II) Commissioned financing, derivatives investment and commissioned loan

1. Entrusted wealth management

During the reporting period, the Company had no entrusted wealth management within its normal

operation.

During the reporting period, the Company issued 1615 accumulated financing products which

caused the sale of RMB 301.670 billion yuan (excluding products due on demand). At the end

of the reporting period, the balance of financing products managed by the Company was RMB

111.933 billion yuan.

Item 31 Dec. 2014

31 Dec. 2013

Proportion of shares

of invested companies held by the Company

Main business

Clearing Center for City Commercial Banks

250 250 0.83%

The Clearing Center for City Commercial Banks is a nonprofit membership organization which city commercial banks may join in or not of their own accord. It is mainly responsible for non-local clearing for city commercial banks.

Yongying Fund Management Co., Ltd.

135,000 135,000 67.50%Fundi raising fund sales, assets management for special customers, assets management and other businesses approved by CSRC.

Total 148,250 148,250



49

Contract category

Contractual amount on 31

Dec. 2013

Contractual amount on 31

Dec. 2014

Profit and loss during the

reporting period

Proportion of contractual amount to

the net assets of the Company at the end of

the reporting period

Foreign exchange forwards

12,896,593 15,740,563 276,106 46.17%

Currency swap 137,289,041 165,780,139 366,506 486.29%

Interest rate swap 108,846,526 230,561,606 (430,654) 676.31%

Currency swap 60,530 147,036 (2,653) 0.43%

Option contract 1,690,351 2,344,628 (80,097) 6.88%

Total 260,783,041 414,573,972 129,208 1216.08%

2. Investment on derivatives


Instructions on risk analysis and control measures of derivatives d u r i n g t h e r e p o r t i n g p e r i o d (including but not limited to market r isk, l iquidity r isk, credit r isk, operational risk and legal risk, etc.)

Before launching new types of derivatives, the Company fully identified, analyzed and assessed different risks by the new product committee which adopted duration, limit control, risk value, stress test, credit line management to conduct risk measurement and control of derivatives.

Changes on the market price or the fair value of invested derivatives dur i ng the repor t i ng pe r i od . The analysis on the fair value of derivatives shall disclose detailed methods and setting of related hypotheses and parameters.

The market price or the fair value of derivatives invested by the Company fluctuates with the changes of trading parameters during the reporting period. Estimated parameters of derivatives shall be set according to different products and in accordance with industry practice. For fair value measurement, it adopted the estimation model provided by the middle- and back- office estimation system.

Instructions on whether accounting p o l i c i e s a n d a c c o u n t i n g o f derivatives during the reporting per iod changed s ign i f i can t l y compared with those in the previous reporting period.

None

Independent directors' opinions on investment and risk control of derivatives of the Company

Independent directors of the Company understood that trading of derivatives is one of regular banking business approved by CBRC. During the reporting period, the Company attached importance to risk management of this business and carried out efficient risk control over trading of derivatives.

Derivatives held at the end of the reporting period


2014 ANNUAL REPORT

50

3. Entruseted loan

At the end of the reporting period, the Company had no entrusted loan within its normal operation.

(III) Use of raised fund

In accordance with Approval regarding non-public offering of Bank of Ningbo Co., Ltd. (Zheng Jian

Xu Ke [2014] No.910) issued by CSRC, in September 2014, the Company issued RMB common

stocks (A share) 366,007,872 at RMB 8,45 yuan per share to Ningbo Development Investment

Group Co., Ltd. and Singapore Overseas-Chinese Banking Co., Ltd. in a manner of non-public

offering with par value of RMB 1 yuan.The raised funds reached RMB 3,092,766,518.40 yuan.

After deducting sponsoring and underwriting expenses, the Company actually raised net assets

RMB 3,076,511,485.27 yuan from new non-public offering, verified by Ernst & Young (2014) No.

60466992-B02 Capital Verification Report issued by Ernst & Young (special general partnership).

In accordance with the report of issuing A shares through non-public offering as well as fund

raising program disclosed within listed company statement, all funds rasied from A share issuance,

after deducting issue expenses, was counted as the capital funds of the Company.

(IV) Analysis of key subsidiaries and joint stock companies

The Company established a new wholly-owned subsidiary-Yongying Fund Management Co., Ltd.

which was set up on 7 November 2013 with the registered capital of RMB 150 million yuan. In

Augest 2014, the capital and share of Yongying Fund Management Company increased, and the

registered capital reached RMB 200 million yuan. The Company held 67.5% of shares. Yongying

Fund Management Company is mainly engaged in fund raising, fund sales, management of special

customers' assets, assets management and other businesses approved by CSRC. At the end of

2014, Yongying Fund Management Company had the total assets of RMB 676 million yuan and net

assets of RMB 225 million yuan; in 2014, Yongying had operating revenue of 62.7124 million yuan,

operating profit of 24.4727 million yuan and net profit of 23.0325 million yuan.

(V) Significant projects invested without raised fund

During the reporting period, all significant projects were invested by raised fund, except for those

disclosed.

III. Risk management

The Company is confronted with credit risk, liquidity risk, market risk, operational risk, compliance

risk and reputation risk during operation. The details are as follows:



51

(I) Credit risk

A credit risk occurs when a customer (or a counter party) may not or is unwilling to carry out the

obligations as agreed with the Bank. The Company has following credit risk bearing assets: loans,

inter-bank lending, assets under resale agreements, due from banks, bonds investment, interest

receivables, other receivables and off-balance assets.

The Company realizes management objectives by identifying, measuring, monitoring, controlling/

releasing and reporting credit risks. It has designed proper regulations and standardized specific

business procedures to ensure effective recognition of credit risks, and taken proper measures to

control the credit risks before, during and after loans.

By stipulating credit policies, the Company was able to recognize risks in respect of industry,

product and region as a whole, implemented differentiated policies upon the extent of risks, and

gave instructions on admittance. It took more cautious attitudes towards industries or products

with higher risks by employing more risk control measures or limiting authority. The Company

strictly carried out the credit rating system for customers which worked as important reference for

customer permit. By analyzing customers' operation and financial position, the Company assessed

customers' core competence of debt repayment and estimated its probability of default.

The Company established proper loan review and approval systems, and appointed independent

review and approval personnel. After submittal, professional risk management personnel would

go through meticulous investigation and analysis on clients' information in compliance with credit

risk management requirements, and give out their independent risk review opinions; review and

approval officers at different levels adhered by the credit approval system and credit policies to

give their opinions within their authority and express their requirements of loan release and after-

loan management.

The Company continued to optimize credit risk monitoring system, the credit clients risk early-

warning system and the after-loan risk management system to ensure credit risks can be identified

and controlled in time. Risk monitoring covers external and internal information of credit clients,

including customers' operations, industrial development trend, customers' credit behaviors, other

financial institutions' evaluation and attitudes, etc.. Risk early-warning is a two-way and bidirectional

system by collecting customers' early-warning information from multi-channels, including business

sectors to management departments and vice versa. It aimed atconstructing a new comprehensive

risk early-warning system, and ensuring that the early-warning information can be detected and

reported timely so as to take proper early-warning actions immediately and to further guarantee

the effectiveness of early-warning management. After the loans are granted, the Company paid

attention to examine the practical use of credit funds as well as operational condition and financial


2014 ANNUAL REPORT

52

condition of the corporate, value change of guarantee and the like, and carried out dynamic track

management on customers.

According to requirements of the supervision department, based on the recovery possibility of the

loan principal and interest as well as borrowers' repayment capability, repayment record, intent of

repayment, guarantee, legal responsibility for loan repayment and credit management, the Company

classified credit assets upon their degree of risk and divided the five tiers into ten tiers. It included

pass (pass+, pass and pass-), special mention (special mention +, special mention, special mention-),

substandard (substandard+, substandard-), doubtful and loss. The ten-tier classification system

quantitatively revealed the practical value and risk degree of loans. The Company made proportional

provision upon different classes to ensure effective defense against credit risk.

Besides, to guarantee the completeness and effective coverage of the credit risk management

system, the Company established the matched management system., including the risk reporting

system which is able to make sure that the board of directors and the senior management can

obtain exposuredata and analysis materials of different types of risks in the bank. Reports include

followings: risk exposure position, risk degrees and their internal structure in terms of business,

departments, regions and risk categories; profit and loss; changes in methods and precedures of

risk recognition, measurement, monitoring and control; compliance with risk management policies

and procedures; compliance with risk limits; stress test; internal and external audit; major risk

matters.

During the reporting period, the Company mainly took following measures to prevent credit risks of

corporate loans: I. enhanced analysis and prediction of the market, researched changes in industries

to which major loans were granted, stipulated 2014 credit business guidelines in time, and realized

forward control of credit business. According to external environment changes, the Company

properly adjusted credit policies and credit structure, and further clarified key industries and

sectors for credit policies. II. fully implemented full-process risk management: the Company continued

to optimize construction of related systems as well as inspection on organization personnel, and

analyzed the credit business. The deep implementation of those work was used to realize the

quality situation of the Company's assets comprehensively and accurately, so as to further improve

after-loan management level. III. to complete system construction and realize efficient utilization

of external information to enhance risk management: the Company introduced credit system note

risk early warning module, lead external information including reporting loss, stopping payment of

notes and public summons, and enhanced early warning signal of relared risk and instruction of

risk prompt, so as to acquire related information of the note more comprehensively, timely and

conveniently and to realize efficient management on note risk; IV. to refine and improve after-



53

loan management: the Company carried out differential after-loan hierarchical management on

customers as according to their corporate nature and guarantee situation, so as to improve

quality and efficiency of credit customer management; V. to continue risk examination: the

Company examined the industry, business and people sensitive to risk, followed starting situation

of creditenterprise, checked note business, visited people of high risk, etc. It also summarized and

analyzed non-performing loans over the year, so as to continuously improve the risk management

level of the Compoany; VI. futher promote confirmation of responsibility of the non-performing

credit assets. In 2014, the Company, when completing confirmation of responsibility with quantity

and quality, further revised the management method of responsibility confirmation and investigation

on the non-performing credit assets, including responsibility confirmation channel for separating

employees, administrative responsibility investigation for non-performing credit assets, so that the

responsibility confirmation work became more rigorous, more efficient and more reasonable.

The Company's credit concentration risk level at the end of the reporting period:

1. Credit concentration risk level of the largest single customer

As of 31 Dec. 2014, the loan balance of the largest single customer was RMB 1.0712 billion yuan,

accounting for 2.56% of the net capital of RMB 41.84402 billion yuan. It met the requirements of

CBRC as no more than 10% of the net capital.

2. Credit concentration risk level of the largest single group customer

As of 31 Dec. 2014, the loan balance of the largest single group customer was RMB 1.8398 billion

yuan, accounting for 4.40% of the net capital of RMB 41.84402 billion yuan. It met the requirements

of CBRC as no more than 15% of the net capital.

3. Proportion of top 10 customers in terms of loan outstanding

As of 31 Dec. 2014, the top 10 customers' loan balance totalized RMB 5.31504 billion yuan,

accounting for 12.70% of the net capital of RMB 41.84402 billion yuan.

4. Credit proportion of the single related party

As of 31 Dec. 2014, the credit exposure of the largest single related party was RMB 1.76706 billion

yuan, accounting for 4.22% of the net capital of RMB 341.84402 billion yuan.

5. Overall relevancy

As of 31 Dec. 2014, the utilized credit exposure of all connected parties of the Company was RMB

5.18712 billion yuan, accounting for 12.40% of the net capital of RMB 41.84402 billion yuan. It met

the requirement of CBRC as no more than 50% of the net capital.


2014 ANNUAL REPORT

54

According to the five-tier classification, the NPL balance was RMB 1.86283 billion yuan, up by RMB

337.61 million yuan over the previous year; the NPL ratio was 0.89%, flush with previous year. As

parts of NPL, the substandard loan balance was RMB 543.23 million yuan, accounting for 0.26%;

the doubtful loan balance was RMB 881.73 million yuan, accounting for 0.42%; the loss loan balance

was RMB 437.87 million yuan, accounting for 0.21%.

(II) Liquidity risk

Liquidity risk is caused when it is impossible to obtain sufficient fund in time at a reasonable cost

for repaying matured debts, performing other payment obligations or meeting other fund demands

for ordinary business.

According to requirements of regulatory policies and macro-economic changes, the Company

strengthened the construction of liquidity risk system, continued to improve liquidity risk

management technologies, periodically monitored liquidity risk indicators, daily monitored the cash

flow gap, conducted the liquidity risk stress test, and enhanced the liquidity risk management

capability. During the reporting period, the Company took following measures to improve the

liquidity risk control: I. to improve policy system and measurement method of liquidity risk

management, supervise and monitor index caliber, and improve liquidity risk management level;

II. to construct liquidity risk management system, optimize system tool, and realize calculation of

cash flow gap, index monitoring and stress test on liquidity risk; III. to construct daily market fund

early warning system and track liquidity change in the market timely; IV. to continue to increase the

investment on treasury bond and increase reserve of high-quality liquid assets.

During the reporting period, liquidity risk indicators were analyzed as below:

1. Liquidity ratio

As of 31 Dec. 2014, the balance of liquid assets was RMB 101.48324 billion yuan, and the

balance of liquid liabilities was RMB 185.83440 billion yuan. The liquidity ratio 54.61%, meeting the

requirement of CBRC as no lower than 25%.

2. Loan-deposit ratio

As of 31 Dec. 2014, the loan balance was RMB 210.062 billion yuan (including the financial debts

related loans of RMB 13 billion yuan) and the deposit balance was RMB 306.532 billion yuan. The

loan-deposit ratio was 64.12%, meeting the requirement of CBRC as no more than 75%.

3. Liquidity coverage ratio

As of 31 Dec. 2014, the Company reached high-quality liquid assets of 59607.54 million yuan, net

cash outflow 58737.21 million yuan within 30 days, and liquidity coverage ratio 101.48%, meeting



55

the requirement of no less than 60% as required by CBRC.

(III) Market risk

Market risk is the risk of possible loss caused by the fluctuations of the value of financial

instruments. The possible loss of future gains or cash flows are due to changes in interest rates,

exchange rates or other market factors. The key market risks undertaken by the Company are

interest rate risk and exchange rate risk.

The interest rate risk is the primary market risk of the Bank at present and the Company has taken

following measures to control the interest rate risk: I. strengthened control on risk limits: according

to the market environment and the development of capital business, the Company adjusted internal

authorization for market risk limits in time to guarantee the healthy development of the capital

business under the controlled market risks; it measured and monitored the limits of capital business

in accordance with market risk indicators and limits as approved by the Board of Directors at the

end of every day; the interest rate risk indicators monitored by the Company includes interest rate

sensitivity indicator limit, stop-loss limit, risk value limit and liquidity limit; II. actively implemented

stress tests: the Company conducted stress tests of the market riske periodically and non-

periodically as an effective supplementary mean for daily limit management; apart from regular

test at the end of every month, the Company also carried out emergency stress test and gave

early warnings in the case of significant market fluctuations and other emergency; III. risk hedging:

for key interest rate risks in transaction accounts of the Company, it guaranteed reasonable and

controlled interest rate risk by adjusting transaction term, hedging between similar products and

hedging with interest rate derivatives. Apart from limit control, stress test and risk hedging for

interest rate risk control, the Company also utilized daytime control on trading days, position control

at the end of every trading day to guarantee reasonable and controlled interest rate risks.

During the reporting period, the Company took following measures to enhance control over the

market risk: I. optimized construction of market risk system group, finished phase I construction

of customer trading system, integrated customer trading achievement functions undertaken

by e-bank and credit systems within the bank, optimized customer trading marked-to-market

and deposit management, and realized automatic trading intercepting and automatic reminding

functions under the state that deposit was insufficient; II. continuously improved the function of

capital business system: the configuration of trading varieties was newly added in Summit system,

including valuation modelling and system configuration of large-denomination negotiable certificate

of deposits, forward transaction of domestic fund, assets backed security (ABS) and private

placement note (PPN); III. periodically carried out sensitivity analysis on market risk: considering the

position and new market changes, the Company conducted sensitivity analysis to reveal weak links


2014 ANNUAL REPORT

56

in market risks and improve the risk early-warning capability; IV. carried out the standard-reaching

project of market risk capital standard method, improved the accuracy of market risk measurement

and internal management level; and meanwhile, actively prepared internal model method project of

market risk capaital.

During the reporting period, the Company's market risk indicators are analyzed as below:

1. Interest rate risk sensitivity

As of 31 Dec. 2014, the interest rates increased by 200 base points, which led to a decrease of

RMB 4.16031 billion yuan in the Company's net value, and the net capital value was RMB 41.84402

billion yuan. The interest rate sensitivity was -9.94%.

2. Foreign exchange exposure position ratio

As of 31 Dec. 2014, the accumulated foreign exchange exposure position balance was RMB

2.220843 billion yuan, and the net capital value was RMB 41.84402 billion yuan. The accumulated

foreign exchange exposure position ratio was 5.28%.

3. Value at risk (VaR)

As of 31 Dec. 2014, The Company adopted 99% as the confidence level and one day as the holding

term. The VaR of transaction accounts was measured to be RMB 51.52 million yuan, which was

within the limits specified by the Board of Directors, showing controlled market risk.

(IV) Operational risk

Operational risk refers to the risk of loss arising from inappropriate or problematic internal

procedures, personnel, systems or external events. Operational risks are mainly caused by four

categories of risk factors: personnel risk, procedure risk, system risk and external event risk.

During the reporting period, the Company took following measures to further enhance control

over operational risks: I. further optimized the system of operational risk and case prevention

management, improved pertinency and effectiveness of operational risk management and case

prevention, and established "Guidances on the Operational Risk Management in branches of Bank

of Ningbo", "Regulations of data security management of Bank of Ningbo", "Reward scheme for

Case Prevention of Bank of Ningbo" and other systems; II. optimized operational risk system, and

carded and optimized the operational risk system from six aspects, i.e., capital measurement,

outsourcing management and index sort management; further promoted application of three tools

of the operational risk management in various departments and lines of the Company, organized

self-assessment of phase II operational risk and control, improved the pertinency and effectiveness

of the operational risk management, and meanwhile accumulated risk data for new protocol



57

implemented in the future; III. established operational risk audit mechanism of business sytem; the

Company carried out operational risk audit to various departments through system and business

procedures. It professionally audited whether the core operational risk of the business involved was

recognized, whether main operational risk was controllable and whether it was feasible in practical

business environment; meanwhile, the Company intervened to new products in advance and offered

corresponding operational risk professional support; IV. established operational risk analysis meeting

system; branches organized related departments to attend operation risk analysis meeting every

two months, to discuss and exchange the status and trend of operational risk in the region of the

branch in current period as well as main operation risks, countermeausres of the branch, reported

problems and suggestions to the head office periodically, and carried out improvement in head

office and branches; V. enhanced risk prompts: timely released various risk prompts in accordance

with typical risk events occurred in banks, urged related units to rectify or enhance attention timely;

meanwhile, for the typical cases reported by supervisor, timely organized related departments to

discuss main risks and reseached improvement measures; VI. enhanced case risk examination:

carried out case risk examination every three months, implemented normal cases risk examination

on various businesses of the Company from point to surface through s data check, teller report

and special examination; organized case special governance; comprehensively carded, checked and

rectified employee's ethical risk and business procedure risk through six ways including employee

information carding, home visiting, office space inspection, interview, financial case education and

earnest talk, togetherwith self-examination of branches, recheck by joint inspection group and

examination of head office line management department.

(V) Compliance risk

Compliance risk refers to the risks of commercial banks being subject to legal sanctions, regulatory

punishments, major financial losses, or reputation diminishing as a result of their failure to obey the

laws, rules and guidelines.

During the reporting period, the Company mainly took following measures to prevent compliance

risks: I. further enhanced management of the compliance system. According to external changes of

laws, rules and regulatory policies, and also considering its own business development, the Company

added and revised 225 internal control policies in 2014; it carried out internal control system post-

assessment for note, custody, credit management, as well as overall evaluation of annual internal

control system, to ensure systems were legal and compliant; II. continued to arrange inspection

of business compliance; in combination with business implementation and focuses of supervision

department, the compliance department coordinated annual business examinations in various

departments, enhanced examination in high-risk field, weak links and key businesses, tracked


2014 ANNUAL REPORT

58

implementation schedule of examinations, summarized and analyzed problems in examinations,

urged rectification and improved effects of the examinations; III. further implemented the

compliance evaluation and assessment; departments in the headquarters, branches/sub-branches,

team leaders and staffs were all assessed; points deduction was adopted; assessment results

were an integral part of the annual performance assessment for headquarters, team leaders and

staffs as well as the annual internal control assessment for branches/sub-branches; IV. enhanced

employee's consciousness of compliance risk; organized study and examination on five mechanisms

of case prevention and financial criminal cases, and enhanced employee's concepts of knowing

laws and obeying laws; monitored employee's illegal behaviors, analyzed employee's illegal behaviors

discovered in internal and external examination, collected and analyzed typical illegal cases, and

annouced within whole bank, so as to further enhance the executive force of internal and external

rules and regulations; V. further enhanced the construction of compliance culture; carried out

compliance talking to new employees within the whole bank, implemented inoculation of compliance

requirement and compliance consciousness of the Company, and signed compliance commitment

letter; explored advanced compliance case, set compliance examples and organized example

persons in touring lecture; carried out activity of "zero violation among sales networks in ten cities",

and appraised advanced compliance sales networks of zero violation.

(VI) Reputation risk

Reputation risk refers to the risk that the Company might be negatively evaluated by relevant

interested parties due to the Company's operations, management and other activities or external

events. According to regulatory requirements and the development trend of new media, the

Company insisted on the principles of prevention first, being active, reporting timely and whole staff

participation, and optimized the reputation risk management policies and procedures to effectively

prevent reputation risk.

In 2014, the Company further improved the reputation risk management system and compliant

management system to enhance management over media and compliant events, and enhance its

reputation risk management. I. consolidated reputation risk firewalls through upgrading reputation

risk management system and formulated reputation risk management standard brochures. II.

Integrated and standardized the compliant processing procedure. All compliant of the Bank should

be dealt with by the department of procedure innovation and customer experience; The problems

are discussed between departments periodically. III. Tracked the whole procedure of compliant

processing and result feedback through the compliant management system platform to improve the

timeliness, solution and satisfaction of compliant processing. IV. Enhanced monitoring and reporting

of reputation risk events, kept updating public opinions, clarified false or incomplete information



59

timely, and dealt with reputation risk events upon their degree of severity.

(VII) Anti-money laundering management

In 2014, the Company, starting from comprehensive trial of anti-money laundering large-amount

and suspicious transaction reporting, firmly mastered risk-oriented working method, established and

perfected risk rating and sort management of anti-money laundering, anti-terrorist financing, major

account abnormity handling, product anti-money laundering risk assessment and analysis of money

laundering type, fulfilled legal anti-money laundering obligations including customer identification,

large-amount and suspicious transaction reporting and terrorist assets freezing, paid high attention

to anti-money laundering training, energetically carried out propaganda work of anti-money

laundering, implemented internal management and audit examination of anti-money laundering, and

actively assisted supervision department in investigation, survey and the like, so as to effectively

improve anti-money laundering performance and work level of the Company.

(VIII) Implementation of new capital accords

During the reporting period, the Company took supervision requirement as compliance goal

and internal promotion as implementation power, so as to steadily and orderly promote the

implementation and achievement of new capital accord project; I. realized application of non-

retail internal rating system, deployed 10 scoring models applicable to corporate and interbank

businesses, applied rating result to access and approval authorization, and formulated pricing and

performance appraisal program based on risk-adjusted rate of return (RAROC); II. completed design

of retail internal rating system, developed application, behavior and collection scoring card covering

all key products including credit card, personal loan and small and micro businesses; designed

application strategies of credit approval, limit management, limit adjustment and renewal, after-loan

layering and collection management based on scoring card and business rule, and developed retail

risk pool model; III. carried out risk weighted assets (RWA) system construction, and completed

listing of credit risk weighting method and operation risk capital measurement. Meanwhile, to

assist the implementation and achievement of the project, the Company formulated data standard

at enterprise level, implemented data quality management, gradually optimized data warehouse

construction and built a credit risk data set, so as to provide continuous data support for the

implementation of new accord.

(IX) Explanations on the completeness, reasonability and effectiveness of the internal

control system

1. Identification of large amount exposure and risk concentration

During the reporting period, the Company identified and managed large amount exposure


2014 ANNUAL REPORT

60

and concentrated risks effectively. According to risk management policies of credit customer

concentration in "Administrative Measures on Credit Business Concentration Risks of Bank of

Ningbo", it carried out a variety of credit business concentration risk management methods:

periodically monitoring and analyzing loan concentration, industry concentration and other

indicators; improving customer concentration, collaterals concentration, industry concentration,

region concentration, business type and term concentration. It was conducive to avoid excessive

concentration of loans to a single customer or industry, and enhance the overall risk management

level of credit business.

2. Accuracy and completeness of parameters applied by the evaluation procedure of the Bank

The Company evaluated risks by means of implementing credit rating of customers as legal

persons and classifying credit business into ten categories. During the reporting period, the rating

results of credit customers were consistent with customers' credit standing, and parameters for the

evaluation procedure were basically accurate, complete and effective.

3. Reasonability and effectiveness of the evaluation procedure of the Bank in scoping

During the reporting period, the Company implemented the reasonable capital evaluation and risk

evaluation procedure. The scope of the evaluation procedure was reasonable and effective.

4. Stress test and analysis of assumptions and parameters

During the reporting period, the Company continuously improved the technology and approaches

of stress test, optimized the scene of stress test, applied test methods including sensitivity test

and scenario test, periodically conducted stress test on the liquidity status, market risk status and

real estate loan credit risk status of the Company, understood potential risk factors, analyzed the

capability of risk defense, formulated related measures and prevented impact of extreme events to

the Company.

In conclusion, the Company has formulated a relatively complete, reasonable and effective internal

control system. As the Company further improved the effectiveness of the implementation of

the internal control system, branches and sub-branches raised awareness of internal control and

well implemented internal control measures of each business line without any significant internal

control defect. According to requirements of national laws and regulations and its demands on

operation and management, the Company will further improve the completeness, reasonability and

effectiveness of the internal control.

IV. Capital management

The objectives of company's capital management include: (1) to maintain a reasonable level of



61

capital adequacy ratio and steady capital foundation, support the development of company's

businesses and implementation of strategies, improve the ability to defense risks and realize

comprehensive, harmonious and sustainable development; (2) to establish and constantly perfect

performance management system focusing on economic capital, accurately measure and cover all

types of risks, optimize resource allocation and operational management mechanism to create the

best returns for shareholders; (3) to apply various capital instruments properly, optimize amount

and structure of capital and improve quality of capital.

The main principles for our company's capital planning are: to ensure the level of capital adequacy

ratio conforms to the requirements of regulatory policy and maintains the basic stability. The

Company will try to improve capital allocation efficiency and capital adequacy level by means of

strengthening and improving economic capital management, etc.; the management objective for

capital adequacy ratio will be realized by preferentially adopting the measures such as optimizing

asset structure, controlling the increase of risk-weighted assets and improving the profitability.

(I) Economic capital allocation and management

In 2014, our company boosted economic capital management steadily, formulated economic capital

distribution plan, realized capital's optimal allocation among various business lines, regions, products

and risk domains through economic capital limit management, restrained the scale expansion of

risk assets, constantly improved the sensitivity of economic capital measurement and constantly

deepened the management application of economic capital in various sectors so as to achieve the

objective of capital return and capital adequacy.

(II) Conditions of capital adequacy ratio

According to the request of Notes About the Relevant Arrangement in the Transition Period of

Implementing Capital Management Measures for Commercial Banks (Trial) issued by CBRC and

actual operating status, the Company formulated Long and Medium-term Capital Planning for Bank

of Ningbo Co., Ltd (2013-2018) c to make clear company's schedule of reaching the standard

capital adequacy ratio and ensure the level of capital adequacy ratio, strategic development plan of

the company and comprehensive risk management ability are matched.

In compliance with the relevant regulations of Capital Management Measures for Commercial

Banks (Trial), the scope of consolidated data covers the parent company and the affiliated fund

company. Up to Dec.31, 2014, the capital adequacy ratio, tier 1 capital adequacy ratio and core tier

1 capital adequacy ratio of the company are as follows:


2014 ANNUAL REPORT

62

Table for the Conditions of Capital Adequacy Ratio

1. Measured in compliance with Capital Management Measures for Commercial Banks (Trial)


Item

Dec. 31, 2014 Dec. 31, 2013

ConsolidatedNon-

consolidatedConsolidated

Non-consolidated

the net balance of core tier one capital

33,994,546 33,779,441 25,414,476 25,266,837

the net balance of tier one capital

33,994,546 33,779,441 25,414,476 25,266,837

the net balance of total capital 41,844,020 41,628,915 32,735,921 32,588,282

the total risk-weighted assets 337,552,562 337,046,637 271,379,933 270,308,408

of which: credit risk-weighted assets

307,305,701 306,815,399 246,289,171 245,204,583

market risk-weighted assets 6,353,503 6,362,789 5,773,189 5,786,251

operational risk-weighted assets

23,893,359 23,868,449 19,317,573 19,317,573

core tier one capital adequacy ratio

10.07% 10.02% 9.36% 9.35%

tier one capital adequacy ratio 10.07% 10.02% 9.36% 9.35%

capital adequacy ratio 12.40% 12.35% 12.06% 12.06%

1. In accordance with relevant regulations specified within Capital Management Measures for Commercial Banks (Trial) issued by China Banking Regulatory Commission on June 7, 2012, the credit risk is measured by weighting method, market risk is measured by standard method and operation risk is measured by basic index method.

2. According to relevant regulations of the No. 174 and No. 175 from Capital Management Measures for Commercial Banks (Trial) (China Banking Regulatory Commission, No .1, 2012), "In the transition period of reaching the standard, Commercial Banks shall calculate and disclose capital adequacy ratio of consolidated statements and non-consolidated statements in compliance with Capital Adequacy Ratio Management Measures for Commercial Banks and this method simultaneously". And it's necessary to make sure about the relevant information of disclosed content. Above is the relevant data and information of capital adequacy ratio calculated according to Capital Management Measures for Commercial Banks (Trial).

Note:



63



2. Measured in compliance with Capital Adequacy Ratio Management Measures for

Commercial Banks

Item Dec. 31, 2014

Consolidated Non-consolidated

Core capital adequacy ratio 10.32% 10.16%

Capital adequacy ratio 13.31% 13.88%

According to relevant regulations of No. 174 and No. 175 from Capital Management Measures for Commercial Banks (Trial) ( China Banking Regulatory Commission, No .1, 2012), "In the transition period of reaching the standard, Commercial Banks shall calculate and disclose capital adequacy ratio of consolidated statements and non-consolidated statements in compliance with Capital Adequacy Ratio Management Measures for Commercial Banks and this method simultaneously". And it's necessary to make sure about the relevant information of disclosed content. Above is the relevant data and information of capital adequacy ratio calculated according to Capital Adequacy Ratio Management Measures for Commercial Bank.

calculated in accordance with relevant regulations prescribed within Management Measures for Leverage Ratio of Commercial Banks issued by China Banking Regulatory Commission in 2011.

According to On Supervision Demands of Disclosing Capital Composition Information of

Commercial Banks of CBRC, our company further discloses attached information including the

capital composition table, the detailed explanatory table of relevant item, the principal feature of

capital instruments in the report period. For details, see the special column of investors' relationship

in company's website (www.nbcb.com).

(III) Situation on leverage ratio

Note:

Note:

Items Dec. 31, 2014 Dec. 31, 2013

Leverage ratio 5.02% 4.62%

Core tier-I capital 34,164,212 25,521,888

Core tier-I capital supervision deduction item 169,666 107,412

Net Core tier-I capital 33,994,546 25,414,476

Adjusted in-balance assets balance 559,588,668 466,296,978

Adjusted off-balance assets balance 118,172,967 83,929,299

Adjusted in and off-balance assets balance

677,591,972 550,051,091


2014 ANNUAL REPORT

64

V. conditions of organization construction

No.Organization name

Business addressNumber of

organizations

Number of employees

Asset size

（persons） ('000 yuan)

1 Head OfficeNo. 700, South Ningnan Road,

Yinzhou District, Ningbo City1 1647 251,094,225

2Shanghai Branch

Floors 20-22 of 21st Century Tower, No. 210, Century

Avenue, Pudong New Area, Shanghai City

13 501 30,243,416

3Hangzhou Branch

No. 146, Baochu Road, West Lake District, Hangzhou City

12 456 24,083,221

4Nanjing Branch

No. 120, Hanzhong Road, Gulou District, Nanjing City

10 393 25,214,181

5Shenzhen Branch

D of F1, whole floor of F2 and B of F3, Times Fortune

Tower, southeast of Downtown District, No. 3 Fuhua Road,

Futian District, Shenzhen City

8 373 22,489,947

6Suzhou Branch

No. 749, East Ganjiang Road, Canglang District, Suzhou City

14 444 30,247,276

7Wenzhou Branch

No. 260, Nanpu Road, Lucheng District, Wenzhou City

7 259 7,009,455

8Beijing Branch

Floors 1-2, Floors 11-15, Glorious Oriental Center, No.

100, 3rd West Ring Road North, Haidian District, Beijing

City

5 275 19,251,709

9 Wuxi BranchFloors 1-2, No. 20, North

Avenue, Beitang District, Wuxi City

5 237 15,394,887

10Jinhua Branch

No. 1133, Danxi Road, Jinhua 1 99 2,961,568

11Shaoxing Branch

Beichen Commercial Building, No.653, Jiefang Road,

Shaoxing City1 69 2,209,207

12Haishu Branch

No. 135, South Liberation Road, Haishu District, Ningbo

City5 117 4,641,915



65



organizations

Number of employees

Asset size


13Jiangdong Subbranch

No .466, East Zhongshan Road, Jiangdong District, Ningbo City

7 173 10,686,716

14Jiangbei Subbranch

No. 270, Renmin Road, Jiangbei District, Ningbo City

6 139 11,709,317

15Hudong Subbranch

No. 801, North Liyuan Road, Haishu District, Ningbo City

2 79 4,638,130

16West Gate Subbranch

No. 197, West Zhongshan Road, Haishu District, Ningbo

City5 103 4,258,430

17East Gate Subbranch

No. 868, East Beizhang Road, Jiangdong District, Ningbo City

9 195 6,836,515

18Tianyuan Subbranch

No. 230, Liuting Street, Haishu District, Ningbo City

4 103 3,987,758

19National Hi-tech Zone Subbranch

No. 651-655, Jiangnan Road, Hi-tech Zone, Ningbo City

5 116 4,820,715

20Siming Subbranch

No. 9, Lantian Road, Haishu District, Ningbo City

6 116 11,443,737

21Mingzhou Subbranch

No .199, Middle Songjiang Road, Yinzhou District, Ningbo

City9 169 6,360,036

22Beilun Subbranch

No. 221, Mingzhou Road, Xinqi Town, Beilun District, Ningbo

City7 150 6,691,456

23Zhenhai Subbranch

No. 18, Station Road, Zhenhai District, Ningbo City

6 124 5,459,438

24Yinzhou Subbranch

No.666, Middle Siming Road, Zhonggongmiao Street,

Yinzhou District, Ningbo City10 193 8,947,359

25Ninghai Subbranch

No. 158, Times Avenue, Taoyuan Street, Ninghai

County, Ningbo City7 143 3,776,211

26Yuyao Subbranch

No .28, West Yangming Road, Yuyao City, Ningbo

8 160 6,579,120

27Xinjian Subbranch

No. 340-348, West Yangming Road, Yuyao City, Ningbo

8 114 3,896,130


2014 ANNUAL REPORT

66



organizations

Number of employees

Asset size


28Cixi Subbranch

No. 207, Ciyong Road, Cixi City, Ningbo

10 180 6,271,749

29Chengdong Subbranch

No. 483-495, Xincheng Avenue, Cixi City, Ningbo

10 154 3,551,884

30Xiangshan Subbranch

No. 503, Xiangshangang Road, Dandong Street, Xiangshan

County, Ningbo City4 98 3,440,101

31Fenghua Subbranch

No. 16, Zhongshan Road, Fenghua City, Ningbo

7 119 5,240,430

32

Maxwealth Fund Management Co., Ltd.

Floor 27, 21st Century Tower, No. 210, Century Avenue,

Pudong New Area, Shanghai City

1 38 676,378

　Total: 246（including 1 secondary subbranch within the jurisdiction of Business Office of Head Office and 33 community subbranches）

7498 554,112,618

VI. Core competitiveness analysis

In 2014, the Company formulated development plan for three years from 2014 to 2016, and

the development plan was approved by the second meeting of the fifth board of directors of

the Company; in accordance with external environment and actual situation of the Company, the

specific development plan of the Company from 2014 to 2016 was proposed, thus constructing the

Company as a respected modern commercial bank with a good reputation and core competitiveness

as soon as possible.

(I) Economic environment

In the next three years, China's economy will maintain a sustained steady growth, which will provide

economic basis for the development of the banking industry in the next three years, but the growth

of China's economy will turn to medium-high speed from high speed in previous few decades, at

this time, the banking industry will face greater challenges:

I. economic structures will be adjusted continuously; with the continuous development of new

technology and new business, impacted by the internet economy, the business situations of many

traditional industries will change; in this process, the assets structural layout of the bank will change



67

subsequently; II. the overcapacity situation is more prominent; a considerable part of the enterprises

will be knocked out and face the pressure of stopping operation in the process of digesting the

overcapacity; III. local debt faces the pressure from safe digestion. As the maturity of many local

debts in stock, the original local debt is confronted with high pressure of circulating and digestion;

at this time, new project still faces pressure of getting into debts continuously.

(II) Supervision environment

Banking industy is highly supervised, and its development trend will greatly determined by the

orientation of regulatory policy It is predicted that the banking industry will be confronted with a

more strict supervision environment in the next three years:

I. Requirements of regulators on the bank's risk management will be more strict; the regulator

always adheres to the concept of steady supervision; as constraint of Basel III on bank's capital is

further enhanced, operating cost of the bank is subsequently improved; II. the competition among

banks will be further promoted with interest rate liberalization, so that the overall interest margin

level of the market is reduced, bank's differential management and meticulous pricing will become

a trend, and internal differentiation of the industry will be further accelerated; III. the regulatory

policies on city commercial banks will affect the development of the Company to a great extent in

the future; supervision department always supervises the city commercial bank as an independent

main body; it is predicted that some regulatory policies in the future will be concerned with

different classification, including, but not limited to, capital adequacy ratio level, deposit insurance

premium, trans-regional management, mixed operation policy and the like.

(III) Social environment

As the social environment, the internet economy is gradually changing people's way of life. The

rapid rise of the Internet financewill bring significant changes in the future development of the

banking industry. This is mainly reflected in:

I. Change in bank's balance sheet; more product innovation opportunities and customer acquisition

channels will be provided for the banking industry with internet finance, so that the conventional

balance sheet structure of the banking industry will be changed, which will require the banking

industry to realize balanced development between asset & liability business and intermediate

business.That is to say, besides focusing on corporate business, banks should gradually enhance

retail and capital business; II. change in bank business model; the traditional business model of the

banking industry will be changed by internet finance; partial customers of the banking industry

will be poached by the internet finance, the bank's role, as an intermediary, will become more and

more important, and requirement for compensating narrow credit spreads by diverse intermediate

business will become more urgent; III. change in profit source of the banking industry; the pace of


2014 ANNUAL REPORT

68

financial disintermediation will be accelerated by the internet finance; it is difficult for the banking

industry to drive profit growth mode simply depending on scale under regulated interest rate, and

profitabilities of different banks will become differentiated significantly.

(IV) Interbank environment

I. More competitors enter into the traditional banking business; restriction of separate operation

will be gradually broken, and non-bank industries of insurance, securities, fund, trust and the like

will participate in competition with the bank in many fields such as assets management; II. the

interior of the banking industry will be further differentiated; the homogenization business of

the bank will be broken; big bank will move towards integrated management and comprehensive

management; medium-sized bank will seek special operation in some special fields; and community

bank will take remote contact with customers with major entry point and adhere to retail business

as main characteristic; III. customer and business fluxion of the banking industry will be enhanced;

with participation of new competitors and increasing differentiation of the business, original bank

customers and businesses will also face the shunt risk.

Based on the above analysis, China's economy is facing opportunities and challenges of structural

adjustment in the next three years; the banking industry faces more challenges than opportunities;

the entire banking industry will be confronted with a difficult transformation period, and the banking

industry will continue to bear pressure in profit growth.

In this process, it is the important subject for the Company to adapt to new business model, to

manage liquidity, to optimize the capital allocation, to achieve the best cost control and to realize

profit under new layout of the balance sheet. Despite the unprecedented challenges, the Company

is confident to be better and stronger in the future.

Confidence of the Company to future development mainly comes from four aspects:

I. The Company has a completed corporate governance structure.

Firstly, as a diversified equity joint-stock listed bank, the Company, after years of effort, has

constantly improved the governance structure; secondly, the Company is relatively reasonable in

equity structure that various shareholders can fully excerice their rights; thirdly, in the governance

structure, the organizational structure covering three meetings and one level, namely shareholders'

meeting, meeting of the board of directors, meeting of the board of supervisors and sensior

management level, is sound that various entities are clear in responsibility boundary and are

coordinated in operation; fourthly, in personnel constitution, the board of directors, the board

of supervisors and senior management of the Company possess rich working experience, and

are diligent and dedicated; both executive directors and senior management are professional

and dedicated, taking long-term development of the bank and creating value of shareholders as



69

responsibility, so as to promote forward development of the bank.

II. The Company possesses development and accumulation for years.

Firstly, after years of development, the Company has own characteristics in multiple aspects

including profit source, risk management, market transformation, technoligical innovation, personnel

training and the like, and has preliminary competitive power in some fields; secondly, in terms of

profit source, many profit growth points exist in the eight profit centers and the profit source

sources of the Company is are more decentralized; thirdly, in the aspect of risk management,

the Company has preliminarily established a comprehensive, all-employee and full-process risk

management system including credit risk, market risk, operation risk, moral risk, legal risk, reputation

risk and the like and integrating front, medium and backgrounds; fourthly, in the aspect of market

transformation, large retail strategy of the Company is smoothly promoted; two retail lines, namely

personal bank buisness and retain retail company business, have preliminarily established already

have a competitive business model in Ningbo preliminarily and stepped to benign development

track, with continuous increase in scale and profit proportion; fifthly, in the aspect of technological

innovation, the Company has preliminarily established a data center, disaster recovery system and

business support system adaptive to business development demand, and such e-channels as online

banking, mobile banking and direct-sales banking are continuously improved; and sixthly, in terms

of talent training, through persistent accumulation, the HR management system of the Company is

gradually completed, and a talent forming mechanism adaptive to the development characteristics

of the Company has been preliminarily established, as well as a young and vigorous employee team.

III. The Company has a good development environment.

Firstly, the head office and 10 branches of the Company are mainly distributed in economically

developed area around the Yangtze River Delta region; and enough customer groups adaptive to

product and business characteristics of the Company are guaranteed for supporting the sustainable

development of the bank; secondly, Ningbo where the head office locates is a city with independent

planning status around the country, with developed private and export-oriented economy, obvious

advantage in talent and high market degree; thirdly, the Yangtze River Delta region where most

branches of the Company locate is covered by high-quality medium-s and small-sized enterprises,

thus having good financial environment and good prospect for future development,which will

support the steady and sustainable development of the bank.

IV. The Company has quick response capacity.

Firstly, after years of training, the Company has become a highly market-oriented bank which. in the

face of possible changes, can timely adjust strategy and direction to meet the needs of customers

and markets. Secondly, in the management model, the Company adhered to a management model


2014 ANNUAL REPORT

70

combining matrix management and vertical centralized management, so as to give full play of

its advantages in few management levels and small management radius; on the basis of steady

operation of various businesses, the Company can respond to new change of the market quickly.

Thirdly, in the linkage between the head office and branches, the Company has established a set of

comparatively mature head office/branch linkage management system, so that it can respond to

market demand quickly for new market environment and business opportunities. Fourthly, on the

basis of development, as strategy investor of the Company, Singapore Overseas-Chinese Banking

Co., Ltd. can support the Company in the new age after interest rate liberalization from experience,

product and intelligence.

(V) Improvement direction of core competitiveness

The core competitiveness will be sustainably developed from the following six aspects:

Firstly, we continue to optimize the layout of the eight profit centers, add more profit growth

points for each profit center, explore integrated business model and establish a more diversified

profit channel; secondly, continue to perfect the full-flow risk management system, and form the

competitive power of risk management; with economic structure adjusted constantly, we should

minimize the costs of various risks; thirdly, continue to improve IT system, and basically form the

technological support competitiveness, so that its leading position in like banks is determined;

fourthly, continue to dock internet financial channel, basically determine the competitivness

of e-channel and promote synchronous development of multiple channels, so as to better win

customes, serve to customers and manage customers; fifthly, continue to perfect HR working

mechanism, meet demand of business development, and establish a multi-level and systematic

talent introduction, training & cultivation and management promotion mechanism; sixthly, continue

to promote construction of branches, enrich a development layout of "one body and two wings";

and in accordance with the orientation of regulatory policies, try to initiate and establish a more

diversified holding non-bank financial institution.

VII. Business review

In 2014, the Company closely adhered to work line of "expanding profitability channels, upgrading

marketing modes, controlling non-performing assets and speeding up talents fostering" made at the

beginning of the year. The growth of profit maintained steady and the asset quality kept stable, the

construction of the information system was obviously achieved and various projects made at the

beginning of the year was completed smoothly. Through efforts of 2014, compared to the past few

years, the Company had highlights six aspects from the point of sustainable development as the

followings:



71

I. Non-performing loan ratio was better controlled. At the end of 2014, the non-performing loan

ratio of the Company was 0.89%, same as that at the beginning of the year. Many operation

institutions of the Company were located in region where economic structure was greatly adjusted,

but the non-performing ratio was kept on the level at the beginning of the year, showing good risk

control capacity and market judging capacity of the Company.

II. Profit source was more diversified and profit distribution was more reasonable. In 2014, in the

first year of Yongying Fund Management Co., Ltd., its profit was 23.0325 million yuan, showing

a good start. Various profit centers were more reasonable in profit distribution, the proportion

of profit from Corporation Bank Business was gradually reduced, contribution of businesses in

financial market was stable, large-retail transformation got initial achievement, and the total profit

proportion of two retail lines was nearly 20%; new profit centers such as note, investment banking

and custody had good growth situation, the profit source of the Company was more diversified and

the distribution was more reasonable.

III. Total profit of branches in various regions exceeded that in Ningbo for the first time. in 2014,

the profit from branches accounted for more than 55% of the company's profit; the profit

proportion also exceeded that in Ningbo for the first time after the scale proportion exceeded that

in Ningbo. For the Company, it was an significant transformation; in the past, the Company achieved

its business growth mainly by business growth in Ningbo, and at present, in turn, the business

development in Ningbo can be supported by branches, so that the entire bank is more balanced in

growth power.

Fourhtly, business scope and business qualification were continuously expanded. In 2013, the

Company set up Yongying Fund Management Co., Ltd.; Yongying Financial Leasing Co., Ltd. was

approved to prepare in December, 2014, and was expected to open in the first half of 2015; in

2014, the business qualification of the Company also increased continuously, including qualification

of treasury bond underwriting group, class B main underwriting, asset securitization, interbank

deposit, SGE financial members, market making of bond and the like, which increses the number of

products serving to different customers and widen the participation surface of the market.

Fifthly, the work of new capital accord was carried forward steadily. At the end of 2011, the

Company, as the earliest bank starting the construction of the new capital accord in the city

commercial banks, started this new capital accord. After three years of efforts, the construction

of such main sub-projects as non-retail credit risk exposure modeling, retail credit risk exposure

modeling, operation risk system and reputation risk management system has been completed

currently, so that the Company is expected to step into the first batch of city commercial banks

implementing the new capital accord.


2014 ANNUAL REPORT

72

Sixthly, the technical supporting ability of the bank was continuously improved. The Company

always adhered to the concept that science and technology constitute the primary productive

force, regarding business driving as key point, continued to improve the construction of aplication

system, and on the basis of completing new core system, new international settlement system, new

capital system and credit risk manageent system, continued to promote the construction of various

scientific and technological systems, so as to construct "three-in-one" application system orienting

to business, orineting to service and orienting to cusstomer, which will offer firm technical support

for the long-term development of the bank.

Specific to promotion of various major businesses of the Company in 2014, various businesses

were obviously improved.

1. Corporate banking

The company's banking business was devoted to service innovation, experience innovation and

product innovation; at present, five business blocks, namely cash management, trade financing, bill

business, investment banking and assset custody, has been formed. The Company was committed

to offerring all-around comprehensive financial service to large and medium-sized enterprises.

During the reporting period, the Company adhered to the professional, differentiated and

diversified service concept in cash management business, thus forming a product system covering

three cores, namely e-bank, investment financing and group investment management, was devoted

to reducing financial risk and cost and optimized capital gains of the medium- and small-sized

enterprises and groups by safe, convenient and efifcient cash management service, and will made

innovation and efforts continuously. In the aspect of treasury management service to large- and

medium-sized groups, the Company had made initial achievement in treasury service, the treasury

management platform of the group was upgraded to 2.0, and group account management, group

investment & financing, group international business, group bill business and the like were realized

in all directions. At present, 108 medium-sized groups and 422 management branches exist within

the service region.

During the reporting period, the Company continued to promote "Kuajingying" platform featured

with domestic and foreign linkage, covering four blocks, namely cross-border trade financing, cross-

border loan, investment banking and private banking. In 2014, the cross-border business volume

broken through $ 4 billion, up by 28%. The Company established cooperation with such regions

as Hong Kong, Taiwan, Singapore, Macau, Thailand, Australia, Europe and the United States, and

the cross-board business volume of OCBC, as a strategic partner, accounted for 38%. Product

variety was continuously enriched, exported risk participation business, joint loan and financing &



73

leasing profit business were newly developed; the Company closely followed special park policies

and handled cross-border RMB loan in Suzhou Singapore Industrial Park. In the aspect of domestic

trade financing, the Company launched bill pool business and developed enterprise bill service

business; in 2014, the amount occurred from bill pool business around the year reached nearly 5

billion yuan.

2. Personal banking

Personal business was one of maily developing fields of the Company; it, when enhancing saving

deposits, wealth management, consumption loan and other basic businesses, made efforts to build

fine customer management, so as to construct the core competitiveness of its personal business in

market segment.

Up to Dec.31, 2014, the Company possessed 2498100 personal customers, including 1900800

customers in Ningbo and 597300 customers in branch areas; the Company had 1022800 basic

customers, increasing 305200 new customers compared to that at the beginning of the year, up

by 42.54%, including 434100 basic customers in branches, increasing 161500 new customers

compared to that at the beginning of the year, up by 59.22%, and 588700 basic customers in

Ningbo, increasing 144000 new customers compared to that at the beginning of the year, up

by 32.38%. Ningbo possessed 110000 high-end customers, up by 37.77%, and 260000 value

customers, up by 18.57%.

In 2014, from the market demand, the Company continued to adhere to the purposes of improving

customers service capacity, product sales capacity and intermediate business earning ability,

continuously extended the competitive advantage of wealth management business, strived to meet

the increasing financial demand of personal investor under new market pattern and urged the rapid

development of wealth management business. Up to Dec.31, 2014, the Company's sales volume of

personal financial product reached 226.943 billion yuan, up by 58.68%.

In 2014, the Company, when accelerating business development, continued to promote strategy

transformation of personal loan business and focused on the optimization of personal loan business

structure, so that the personal loan was kept at rapid growth. Up to Dec.31, 2014, the Company's

personal loan balance reached 60.504 billion yuan, increasing 14.252 billion yuna compared with

that on Dec.31.2014, up by 30.81%. Personal non-performing loan balance was 244.43 million yuan,

and non-performing rate was 0.40%; the personal non-performing loan risk was overally controllable,

and the level of the personal loan non-performing rate was constantly kept at relatively low level.

3. Retail company

Up to Dec.31, 2014, the Company possessed 92236 retail company customers, up by 22%

compared to 2013, including 22159 settlement customers, 17606 credit customers, 2207


2014 ANNUAL REPORT

74

international settlement customes and 27559 e-bank customers. In 2014, the Company continued

to innovate settlement tools for small- and micro-sized enterprises, so that cahs management

efficiency was improved; at the end of the reporting period, 19667 shortcut cards were issued;

it vigorously promoted the international settlement service to small and micro-sized enterprises

and effectively expanded the range of service; at the end of the reporting period, the Company's

international settlement business volume reached 9 billion U.S. dollars in retail company line, up by

20%, international settlement customers 2207, up by 66%; the Company was devoted to creating

safe and rapid electronic financial service to medium- and small-sized enterprises, so that a three-

dimensional electronic financial service system integrating internet banking, mobile banking, Wechat

banking and the like was formed.

4. Financial market

At present, the Company has established cooperation with more than 400 domestic and foreign

interbank customers including policy bank, national commercial bank, foreign bank, local commercial

bank, credit union, registered settlement company, securities company, fund management company,

insurance company, trust and investment corporation, enterprise group financial company, future

company and financial asset management company in various businesses. The Company actively

learned from development experiences of foreign advanced businesses, enhanced product

development, expanded business chain, deeply got involved in foreign exchange market and interest

rate market, actively explored commodity market and credit market, and comprehensively focused

on various financial markets including securities market;of which the business scope was quite wide,

covering foreign exchange business, bond business, financial liability business, derivative business,

asset management, etc.

Faced with the rapidly changing financial market, the Company wound continue to comprehensively

improve capital business level by taking profit as center, on the basis of trading, orienting to

product and starting from science & technology and talent, so as to further stabilize and expand

profit source and to improve the quality of core financial service. During the reporting period, the

Company gained qualifications in important businesses such as interbank deposit, SGE financial

members and market making, so as to lay a good foundation for the sustainable development of

financial market business.

5. Credit card business

In 2014, the credit card business adhered to characteristic business road, continued to enhance

the functions of the product center, innovation center and management support center, and strived

to realize a development mode of low risk and high gain. Up to Dec.31, 2014, the credit card center

issued 1086800 cards in total, and active customers 398900; it reached credit card trading volume



75

19.623 billion yuan, up by 39.00%, accumulated income 1.394 billion yuan, up by 72.95%, money

advanced at the end of year 19.568 billion yuan, up by 72.07%.

6. Bill business

The Company adhered to the concept of high-quality service, aimed at serving to middle- and small-

sized enterprise financing and diverse cooperation in the same business, and provided bill financing

service which is favorable in price and quick to transfer funds to account, forming a perfect

product system covering traditional commercial bill discount, buyer interest payment discount, trade

acceptance discount, e-commercial bill discount, agency discount and the like. The bill business of

the Company had three major advantages: firstly, rapid and efficient professional team and handling

process to provide time-limited service commitment; secondly, accepting bank list covered more

than 500 banks, supporting receipt and small note discount; and thirdly, trading channel covered

various medium-and small-sized enterprises of same business, covering main economic regions

throughout the country.

7. Asset custody

At present, the custody business variety of the Company has covered securities investment funds,

special customer assets of fund company, collective asset management plan of securities company,

oriented assets of securities company, insurance funds, assembled funds trust, single funds

trust, bank financial products, private equity funds, etc. In 2014, the Company was devoted to the

innovation of custody products, process optimization, system R&D, internal control and other work

management measures, and won annual financial innovation award granted by "Daily Economic

News" due to its innovation in custody business. In June, 2014, custody e-bank was listed; up to the

end of the reporting period, 66 custody e-bank customers were attracted, accounting nearly 1/3 of

the custody customers, and freedback from customers using the e-bank was good; easy-custody

system independently researched and developed by the Company was integrally popularized in the

last ten days of January, 2015, and feedback from trial was good.

8. Investment banking

Investment banking business of the Company was committed to playing the role as a financial

intermediary, building a diverse financial service platform, arranging monetary market and capital

market resources through financial productd innovation and financial tool combination, and

offerring comprehensive financial services including investment, financing and advising to medium-

and small-sized high-quality enterprises. At present, the investment banking business has become

an important means for the Company to serve to the customers. During the reporting period,

"Yongyin phase I", as the first personal credit assets securitization project of the Company, was


2014 ANNUAL REPORT

76

issued smoothly, and issuance amount was 4.579 billion yuan, marking that the Company has made

real progress in the process of promoting credit assets securitization; new business qualifications

such as credit assets securitization, credit assets turnover and financial management direct

financing tool were gained in succession, thus laying a good foundation for the Company to serve

to the customers in a wider field.

9. International settlement

In 2014, the company attached importance to the construction of international settlement basic

customer group and constantly improved the product system; under the linkage of the head office

and the branches, the businesses of various branches developed coordinately, and the Company

realized steady growth in international settlement business. During the reporting period, the annular

international settlement amount of the Company was 47.661 billion U.S. dollars, up by 27.35%, and

international business customers 18556 in total.

During the reporting period, the Company continued to promote product innovation and increase

promotion effort, and to offer international business settlement and financing support for medium-

and small-sized foreign trade corporations and some large-sized foreign trade corporations as well

as medium- and small-sized service trade corporations. It actively provided financing support for

medium- and small-sized export enterprises on the basis of "Lihuiying" product, promoted domestic

enterprises to develop foreign business by virtue of "Kuajingying" series products and helped the

customers to acquire foreign high-quality financing resources; the Company met the financing

demands of service trade corporations through "Fumaoying" products and promoted the business

development of service trade corporations.

The Company strived to build three international settlement service brands, namely "rapid

international settlement, intelligent international settlement and star international settlement", it

provided rapid service from simple process and time-limited service, and worked at building an

intelligent e-bank international business platform on the basis of self-service handling and direct

handling; morning/evening-shift working system was set from customer demands; partial businesses

were accepted online for "7*24hr", and star service was provided.

10. E-bank

(I) Internet banking

In 2014, internet banking 5.0 was formally launched; in the aspsect of personal internet banking,

the opening platform of online business hall was provided for the first time; in terms of corporate

internet banking, internet international business was improved; and such businesses as direct

outward remittance and domestic letter of credit were launched.



77

At the end of the reporting period,the total customer number of personal internet banking was

1398500, up by 42.65%; total transaction number throughout the year was 22224300 and total

transaction amount was 1022.523 billion yuan, up by 28.02% and 36.81%.

At the end of the reporting period, the total customer number of corporate internet banking was

88809, increasing by 19906 compared to previous year, up by 28.89%; total transaction number

throughout the year was 6821700 and total transaction amount was 4678.717 billion yuan, up by

19.06% and 86.76%.

(2) Mobile banking

To provide mobile financial service to customers through mobile phone has become a trend. In

2014, the Company strongly invested resources to improve mobile banking channel; new personal

mobile banking 3.0 was launched, so as to improve interaction experience with the new interface.

Up to Dec.31, 2014, the Company reached personal customers of mobile banking 304100 in total,

up by 194.67%; total transaction number was 6,000,000, up by 289.36%, and total transaction

amount was 198.208 billion yuan, up by 385.42%.

(3) Wechat banking

By offerring financial service on communications & social applications, service efficiency was

effectively improved through abundant interaction ways, and more financial information was

provided and applied to the public. In 2014, the Company was active to construct Wechat banking

so as to realize such functions of trade prompt, investment financing and card-free withdrawal,

being widely popular in customers.

Up to Dec.31, 2014, 165900 customers were concerned with the Wechat banking and 97400

customers were bound; during the transaction, the total number of times of query was 1655300,

the financial management sales 4095 and the transaction amount was 0.546 billion yuan.

(4) Self-service banking

As an important way to draw customers from counter, the Company strived to develop such self-

service equipment as ATM (automatic teller machine) and CRS (cash recycling system)In 2014, the

transformation of the way accepting IC card was accomplished,And the ATM now could achive

numer printing which adopted new electronic lock; business safety was effectively improved.

Up to Dec.31, 2014, the Company possessed various cash self-service equipment 590, up by

11.95% compared with the last year, CRS 217, up by 28.07%, including 55 self-service equipment in

Ningbo, up by 16.82%, and 78 self-service equipment in branch regions, up by 60.00%.


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78

VIII. Future development prospect of the company

(I) Industry competition pattern and development trend

It is predicted that China's economy will still locate in reasonable interval and maintain steady growth

status in 2015, However, the increasing downward pressure on current economy will distinguish

deep-rooted contradiction in economic structure, and China will face greater challenges in

economic growth. The banking industry will face a new age in financial reform, the pace of interest

rate liberalization will be accelerated, deposit insurance system will be formally launched, internet

finance will surge forward, regulatory policies will become more strict, industry competition will be

increased and the banking industry will be confronted with more complex business environment. As

a medium/small-size bank, the Company, only adapting to change of economic environment under

"new normal" and having the preparation for dealing with the greater difficulty and challenge, can

win a place in the fierce market competition.

(II) Company's development strategy

The company's long and medium-term development strategic objective: after "triple three years"

effort, construct the Company as a respected modern commercial bank with a good reputation and

core competitiveness.

At present, the goal of first three years of company has been completed successfully. A "one-body

and two-wing" development layout taking the Yangtze River Delta as a main body, and Pearl River

Delta and Bohai Bay as two wings is primarily formed; through the effort of second three years,

company tries to accumulate comparative advantages in target market constantly and primarily

equip itself with different core competitiveness in horizontal competition, so as to become a

respected modern commercial bank with a good reputation and core competitiveness as soon as

possible.

(III) Business development plan in 2015

In 2015, the Company will continue to adhere to the spirit of working hard, and further promote

four key jobs: "expanding profit channel, updating marketing mode, strictly controlling non-

performing assets and accelerating talent training", so as to form differential comparative

advantage as quick as possible and to consolidate the basis of sustainable development.

1. Further expand profit channels

In 2015, the Company will continue to deepen the construction of profit center. The eight profit

centers, namely corporate banking, personal banking, credit card, retail company, financial markets,

bill business , investment banking and assets custody, will strive to form diverse and more stable



79

profit channel to support the steady and sustainable development of the overall business.

2. Futher control strictly non-performing assets

In 2015, the Company, orienting to credit risk prevention, will constantly enhance the executive

force of full-process risk management, establish corresponding implementation assessment system,

promote the implementation and achievement of the new capital accord, continue to adjust and

optimize credit policy, deepen case prevention & control and staff moral risk prevention & control,

pay attention to play the role of audit in the risk prevention & control and firmly follow the rule.

3. Futher upgrade marketing model

In 2015, the Company, in accordance with market environment and customer demands, will actively

explore new marketing tools and means, so as to constantly optimize marketing mode, marketing

process and marketing template; it will continuously deepen linkage between the head office and

the branches, enhance support strength of various departments on marketing and promote the

upgrading of marketing mode and the improvement of overall marketing level, thus achieving

breakthrough of key customer group.

4. Futher speed up talent training

In 2015, the Company will continue to develop the advantages of linkage between the head

office and the branches and arrange echelon construction of line talent, key groups training,

team capability building and other key jobs, so as to meet the demand of company's sustainable

development on talent by enriching training resource, building talent training platform, perfecting

internal assessment restriction mechanism, building internal talent market and the like.

IX. Compared with financial report of the last year, description on change of

accounting policy, accounting estimate and accounting method

From January to March of 2014, the Ministry of Finance made Accounting Standards for Business

Enterprise No.39: Fair Value Measurement, Accounting Standards for Business Enterprise

No.40: Joint Operation Arrangement and Accounting Standards for Business Enterprise No.41:

Disclosure of Rights and Interests in Other Entities, revised Accounting Standards for Business

Enterprise No.2: Log-term Equity Investment, Accounting Standards for Business Enterprise No.9:

Employee Compensation, Accounting Standards for Business Enterprise No.30: Presentation of

Financial Statement and Accounting Standards for Business Enterprise No.33: Combined Financial

Statement. The 7 accounting standards were implemented from July 1, 2014, and it encouraged

the advanced implementation to enterprises listed overseas. In June, 2014, the Ministry of Finance

revised Accounting Standards for Business Enterprise No.37: Presentation of Financial Tools, and it


2014 ANNUAL REPORT

80

is implemented in financial statements in 2014 and later.

Proposal of Bank of Ningbo Co., Ltd. on Changes in Accounting Policies was approved by the board

of directors of the Company on Oct.28, 2014. The Company compiled 2014 Financial Statement

by virtue of the standards. Upon appraisal, the implementation of the accounting standard was

free from significant impact on the financial status of the Company on Dec.31, 2014 as well as on

operation result and cash flow in 2014. The influence of the newly issued and revised accounting

standards on the financial statement of the Company was mainly reflected in classification,

representation and disclosure. The Company adjusted the presentation of other comprehensive

rights and interests, capital reserve, and other rights & interests subjects in 2014 financial

statement in accordance with the standards (seeing Annotation: II. Compiling Basis of Financial

Statement. 2. adopting multiple revised/new accounting standards prescribed within Audited

Financial Statement).

X. Compared with financial report of the last year, description on change of

consolidated statements scope

Compared to the financial report of the last year, no change occurs in the consolidated statement

scope of the Company.

XI. Situations on company's profit distribution and dividend distribution

(I) Formulation, implementation or regulation of profit distribution policy, specifically cash

dividend policy, within report period

The cash dividend policy stipulated by the company complies with the regulations of the Articles of

Association of the company and the requirements of the resolutions of the shareholder's meetings

and both the dividend standards and proportions are definite and clear. The Board of Directors of

the company has conducted special research discussions on the issues concerning shareholders'

returns and has fully listened to the opinions and suggestions from the shareholders (especially

the minority shareholders), independent directors and supervisors. The relevant decision-making

programs and mechanisms are well equipped and the independent directors have fully performed

their responsibilities and obligations and legal rights and benefits of minority shareholders have

been fully protected. The conditions and procedures for the adjustment and modification of the

cash dividend policy of the company are standard and transparent.

Within the reporting period, the Company is free from adjustment or change in cash dividend policy.



81

(II) Company's profit distribution plan and capital reserve extension situations in nearly

three years (including report period)

1. Company's 2014 profit distribution plan: extract statutory surplus reserve by 561,113,000

Yuan by 10% of 2014 net profit; in accordance with regulation prescribed with Reserve Fund

Extraction Management for Financial Enterprise (Caijin [2012] No. 20) issued by the Ministry of

Finance, extract general reserve fund by 998,683,000 Yuan by 1.5% balance of risk assets outside

and inside the Sheet; on the basis of 3,249,828,401 shares in 2014, issue cash dividend 4.5 Yuan

(including tax) for each 10 shares, 1,462,423,000 Yuan in total; 2 shares was increased per 10

shares of capital reserve-transferred equity.

2. Company's 2013 profit distribution plan: extract statutory surplus reserve by 484,541,000 Yuan

by 10% of 2013 net profit; in accordance with regulation prescribed with Reserve Fund Extraction

Management for Financial Enterprise (Caijin [2012] No.20) issued by the Ministry of Finance, extract

general reserve fund by 1,194,715,000 Yuan by 1.5% balance of risk assets outside and inside the

Sheet; on the basis of 2,883,820,529 shares in 2013, issue cash dividend 4 Yuan (including tax) for

each 10 shares, 1,153,528,000 Yuan in total; not donate share or transfer or increase share capital

in 2013.

3. Company's 2012 profit distribution plan: extract statutory surplus reserve by 406,813,000 Yuan

by 10% of 2012 net profit; in accordance with regulation of Allowance for Bad Debts Extraction

Management for Financial Enterprise (Caijin [2012] No.20) issued by the Ministry of Finance, extract

general reserve fund by 1,359,977,000 Yuan by 1.5% balance of risk assets outside and inside

the Sheet; on the basis of 2,883,820,529 shares in 2012, issue cash dividend 2.5 Yuan (including

tax) for each 10 shares, 720,955,000 Yuan in total; not donate share or transfer or increase share

capital in 2012.

(III) Cash dividend situation of the company in nearly three years


Year of dividend

Amount of cash dividend (including tax)

Net profit belonging to shareholders of listed

company in combined sheet of year of dividend

Ratio of net profit belonging to shareholders of listed

company in combined sheet of year of dividend

2014 1,462,423 5,627,466 25.99%

2013 1,153,528 4,847,071 23.80%

2012 720,955 4,068,137 17.72%


2014 ANNUAL REPORT

82

XII. Profit distribution and capital reserve in cash extension plan within the report

period

Quantity of bonus shares in every 10 shares 0

Quantity of dividend (yuan) (including tax) in every 10 shares 4.5

Quantity of extension in every 10 shares 2

Equity base in distribution plan 3,249,828,401

Total cash dividend amount (1,000 yuan) (including tax) 1,462,423

Allocable profit (1,000 yuan) 13,890,483

Proportion of cash dividend in total profit distribution 100%

Cash Dividend Policy

For specific contents, please refer to Shareholder Return Plan of Ningbo Bank Stock Co., Ltd. in Future Three Years (from 2014 to 2016) disclosed on http://www.cninfo.com.cn on January 14, 2014.

Details of profit distribution or capital reserve in cash extension plan

Depending on 2014 annual accounting sheet approved by Ernst & Young, the company realized net profit of 5,611,130,000 yuan in 2014, adding distribution profit 10,627,595,000 yuan in the end of the year, deducting payable common stock dividend 1,153,528,000 yuan and deducting general risk reserve 1,194,715,000 yuan, the allocable distribution profit in the end of year is 13,890,482,000 yuan. Depending on the previous situations, the company proposes the 2014 annual profit distribution plan as follows:

1. Extract legal capital reserve by 561,113,000 yuan by 10% of 2014 net profit;

2. Depending on regulation prescribed with Reserve Fund Extraction Management for Financial Enterprise (Caijin [2012] No. 20) issued by the Ministry of Finance, extract general reserve fund by 998,683,000 Yuan by 1.5% of the ending balance of the risk assets of 2014;

3. on the basis of 3,249,828,401 shares in 2014, issue cash dividend 4.e5 Yuan (including tax) for each 10 shares, 1,462,423,000 Yuan in total;

4. 2 shares are increased per 10 shares of capital reserve-transferred equity.

After implementing the distribution plan, the rest undistributed profit is 10,868,263,000 yuan and 3,899,794,081 shares are in total equity change.

The plan shall be submitted to 2014 AGM for approval.

XIII. Social responsibility

In 2014, the company conscientiously fulfilled the social responsibility as a commercial bank,

adhered to social responsibility concept of "being fair and honest, kind to customers, caring staff,



83

public-spirited, committed to environmental protection, and social return", firmly combine bank

operation management and performance of social responsibility, and work hard to feedback the

society.

Firstly, protect the legal rights and interests of shareholders and investors, continue to improve

value creating ability; secondly, strongly support real economy and try to energize the development

of real economy; thirdly, dedicate into financial popularization and benefiting and meet the financial

requirements of the small and micro enterprises and the common people; fourthly, sincerely serve

the customers and provide the diversified, individual and innovative products and services; fifthly,

care the staff development and build a stage for the mutual development of the staff and the

enterprises; sixthly, significantly develop the electronic banking and provide convenient financial

services for the customers; seventhly, promote the green credit, optimize the credit structure and

promote the transformation of the economic development mold; eighth, adhere to green low-carbon

business and combine the environment protection consciousness into our minds and the banking

business; ninthly, spread the positive social energy and create a caring, helping and assisting social

environment.

We, with effects and truth, are widely recognized by the various sectors of society, and have gained

"Outstanding Contribution Award", "the Best Investor Relation Award" and other awards issued by

authorities in 2014.

For specific contents, please refer to 2014 Social Responsibility Report of Ningbo Bank Stock Co.,

Ltd. disclosed by the company in April 28, 2018 on http://www.cninfo.com.cn.

XIV. Registration sheet of research, communication, interview and other activities

reception within report period

Reception time

Reception place

Reception wayType of

Reception object

Reception object

Major contents of discussion

and provided materials

Feb.17, 2014

Company's meeting room

Field research Institution Bosera Funds2013 third

quarter report

May.19, 2014


Field research Institution GMO Singapore Pte Ltd2013 annual

report

May.21, 2014


Field research Institution Everbright Securities2013 annual

report


2014 ANNUAL REPORT

84

Reception time

Reception place

Reception wayType of

Reception object

Reception object

Major contents of discussion

and provided materials

May.30, 2014


Field research InstitutionCICC, Aberdeen

International Fund Managers Limited

2013 annual report

Jun.4, 2014


Field research InstitutionLianbo Assets Management

Co., Ltd.2014 first

quarter report

Jul.23, 2014


Conference call InstitutionPing An Securities, Jiashi

Fund, Everbright Baodexin Fund

2014 first quarter report

Nov.3, 2014


Field research Institution Huatai Securities2014

semiyearly report

Nov.12, 2014


Telephone communication

Institution

Shenyin & Wanguo, Bank of China Investment

Management, Penghua Fund, Shanghai Boguan

Investment Management Co., Ltd., China Life

Insurance Asset Management Company,

Neuberger Berman Investment Management

Consulting (Shanghai) Co., Ltd.

2014 third quarter report

Nov.13, 2014


Field research Institution UBS Securities2014 third

quarter report

Dec.22, 2014


Field research InstitutionChina Merchants Securities

(Hong Kong)2014 third

quarter report



85

Chapter Seven Important Matters

I. Significant arbitration or lawsuit issues

Within the report period, the company has no arbitration or lawsuit item which will result in

significant influence on the business. Up to December 31st, 2014, the company, as a plaintiff', has a

total object amount of 1,814,990,000 yuan for lawsuit; nine cases that the company functions as a

defendant occur, and there is no compensation amount in expectation.

II. Information on queries of the media

Within the report period, there is no extensive query from the media to the company.

III. Non-business capital occupation of controlling shareholder and related party

thereof occurred in listed company

Within the report period, the company is free from the situation when controlling shareholders and

other related parties occupy the company's capital.

IV. Related issues of bankruptcy reorganization

Within the report period, the company is free from related issues of bankruptcy reorganization.

V. Issues of asset transaction

Within the report period, , the company is free from issues of major acquisition of assets, capital

sale and enterprise merger, except for those have been disclosed.

VI. Implementation and influence of company's ownership incentive

Within the report period, the company is free ownership inventive plan.

VII. Major related transaction

(I) Implementation of credit extension of inside natural person and close relatives thereof in

the bank

Internal natural person statistics involves directors, the board of directors, senior management,

and other staff having right to decide or participate in commercial credit and asset transfer of the

Depending on statistical data of bank related natural person credit business in the end of December

2014, credit business exposure balance under mortgage loan is 237,636,000 yuan, 859,000 yuan

under the pledge and 217,700,0 yuan under warranty; for businesses under no credit, the principle

of not issuing credit loan for directors, the board of directors, senior management, and other staff

having right to decide or participate in credit and asset transfer of the commercial bank as well as

near relatives thereof is insisted.

2014 ANNUAL REPORT

86

Chapter Seven Important Matters（continued）

(II) Transaction higher than 300,000 yuan (including) of related natural person in the bank

The total number of transactions with the related natural person and the bank, that is over 300,000

yuan (including) in 2014 is 885, daily total business balance is 549,539,000 yuan, and exposure

after deducting deposit is 533,806,000 yuan; and up to the end of December 2014, exposure after

deducting deposit is 206,316,200 yuan.

(III) Credit extension implementation of relevant legal shareholders

According to the objective and requirement of the board of directors on related credit control

in 2014, the single-family maximum credit limit for related Ningbo Development & Investment

Group Co., Ltd., Youngor Group Co., Ltd., Huamao Group Co., Ltd., Ningbo Shanshan Co., Ltd. and

Ningbo Fubon Holding Group Co., Ltd. shall not exceed 2 billion yuan, the maximum credit limits for

shareholder related bodies shall not exceed 3 billion yuan, and total credit balance of above five

non-natural person shareholders shall not exceed 8 billion yuan.

Implementation: by the end of December 2014, actual business balance of Ningbo Development &

Investment Group Co., Ltd. and related party in the bank after deducting deposit is 338,691,100

yuan; actual business balance of Youngor Group Co., Ltd. and related party in the bank after

deducting deposit is 1,238,799,700 yuan; actual business balance of Huamao Group Co., Ltd. and

related party in the bank after deducting deposit is 862,366,300 yuan; actual business balance of

Ningbo Shanshan Co., Ltd. and related party in the bank after deducting deposit is 704,167,800

yuan; actual business balance of Ningbo Fubon Holding Group Co., Ltd. and related party in the

bank after deducting deposit is 877,114,200 yuan; and total credit balances of the above five

shareholder related parties is 4,021,139,100 yuan. From the above statistical data, the single-

Measured by: RMB 10,000 yuan

Guarantee wayApproved limit business

(VIP, Daiyitong, Bailingtong, etc.)

Unused rate of approved limit

business

Current exposure balance of loan

business in the bank (including businesses

under limit item)

Mortgage 24590 10983.1 23763.6

Pledge - - 85.9

Guarantee - - 217.7

Credit - - -

In total 24590 10983.1 24067.2


87

family maximum limits of the above five shareholder related parties possessing more than 5% of

the bank's share not exceed 2 billion, the maximum credit limits for shareholder related bodies not

exceed 3 billion yuan, and total credit balance of above five non-natural person shareholders not

exceeds 8 billion yuan.

1. Ningbo Development & Investment Group Co., Ltd. and related party



No. Enterprise nameRevolving

rateActual balance

Actual business balance after

deducting deposit

Remarks

1Ningbo Development & Investment Group Co., Ltd.

20000 Flow loan 10000 10000

2Ningbo Zhongning Construction Investment Co., Ltd.

1000 Issuing 174.86 154.08

3Ningbo Yingda Educational Science & Technology Co., Ltd.

5000 Flow loan 2000 2000

4Ningbo Ningdian Import & Export Co., Ltd

10250

Pledge 1428.38Issuing 2589.57Capital business

3817.95

6559.52

5Ningbo Dahongying Education Group

13000 Flow loan 13000 13000

6Ningbo Ningdian International Trade Co., Ltd.

8450Capital business

4037.58595.47

7Ningbo Ningdian South International Trade Co., Ltd.

9750Capital business

7108.30645.45

8Ningbo International Logistics Development Co., Ltd.

Letter of guarantee 46.35

-

9Ningbo Cultural Plaza Education Investment Co., Ltd.

2200 Loan 914.59 914.59

Total 47598.37 33869.11

2014 ANNUAL REPORT

88

2. Youngor Group Co., Ltd. and related party




rateActual balance


deducting deposit

Remarks

1Zhongji Ningbo Group Stock Co., Ltd.

500 Flow loan 330 330

2Fusheng International Industry Co., Ltd.

12404 Issuing 3469.32 3469.32

3Ningbo Honda Auto Sales Co., Ltd.

1000 Flow loan 1000 1000

4Ninbo Yike Science & Technology Industry Co., Ltd.

5000 - -

5Zhongji (Ningbo) Group Co., Ltd.

150000

Discount 426Issuing 169900.62

Letter of guarantee 6202

Capital business 23086.75

116614.06

6

Ningbo Economic Technology Development Zhongji Import & Export Co., Ltd.

6600Pledge 22.46

Issuing 368.87391.33

7Ningbo Youngor International Trade Transport Co., Ltd.

5000 Issuing 1075.26 1075.26

8Ningbo Yahua Toyota Auto Sales Service Co., Ltd.

2000 - -

9Ningbo Yayuan Garden Engineering Co., Ltd.

-Letter of guarantee

90-

10

Ningbo Bonded Area East China Imported Goods Market Development Co., Ltd.

8000 - -

11Ningbo Zhongji Dongben Auto Sales Service Co., Ltd.

1000 Flow loan 1000 1000

Total 206971.29 123879.97


89

3. Huamao Group Co., Ltd. and related party

4. Ningbo Shanshan Co., Ltd. and related party




No. Enterprise name Revolving rate Actual balance


deducting deposit

Remarks

1Ningbo Huamao International Trade Co., Ltd.

35000

Exchange 64.40Yincheng 9298.96Issuing 10861.27

Letter of guarantee 76Rongchuying 4341.40

22748.95

2Ningbo Huamao Science & Technology Co., Ltd.

20000 Flow loan 20000 20000

3Ningbo Maoxuan International Trade Co., Ltd.

35000

Exchange 919.58Yincheng 1450

Issuing 12318.74Rongchuying 11163.60

25728.09

4Huamao Group Co., Ltd.

15000 Loan 15000 15000bank

consortium

5Zhejiang Huamao International Trade Co., Ltd.

5000 Issuing 2759.60 2759.60

Total 88253.55 86236.63



deducting deposit

Remarks

1Ningbo Shanchen Industry Co., Ltd.

10000 Yincheng 14286 10000

2Ningbo Shanshan Industry Development Co., Ltd.

9000

Flow loan 1000Exchange 1528.75Yincheng 2187.16

Issuing 3.58 Capital business 4186.35

3749.51

3Ningbo Shanshan Property Co., Ltd.

10000 Discount 200 -

4Zhejiang Shanshan Hongzhi Import & Export Co., Ltd.

Discount 530 -

2014 ANNUAL REPORT

90




deducting deposit

Remarks

5Ningbo Beigong Energy Co., Ltd.

Yincheng 5785.73Rongchuying 6202

11424.73

6Shanghai Shanshan Science & Technology Co., Ltd.

2800 Flow loan 2800 2800

7Ningbo Shanshan Science & Technology Co., Ltd.

4900 None -

8

Ningbo Economic Technology Development Zone Huixing Trade Co., Ltd.

9744Flow loan 1420

Issuing 3351.14Rongchuying 1860.60

6631.74

9

Ningbo Daxie Development Zone Chongsheng Trade Co., Ltd.

10000 Yincheng 14286 10000

10Shanghai Zhongke Yinghua Science & Technology Co., Ltd.

5000 Flow loan 5000 5000

11Ningbo Xinmingda Knitting Co., Ltd.

4000Flow loan 1000

Yincheng 802.41Re-guarantee 2000

2441.33

12Ningbo Beiersen Motherhood Supplies Co., Ltd.

Flow loan 500 500

13Ningbo Shanshan New Material Science & Technology Co., Ltd.

2000 None -

14

Ningbo Shangong Structure Monitor & Control Engineering Center Co., Ltd.

Letter of guarantee 47.22 -

15Ningbo Eureka Solar Science & Technology Co., Ltd.

25000

Flow loan 3000Yincheng 11956.71

Capital business 6868.04Domestic issuing 3288.91

Rongchuying 6202

17869.48

Total 101532.99 70416.78


91


5. Ningbo Fubon holding Group Co., Ltd. and related partyMeasured by: RMB 10,000 yuan


rateActual balance


deducting deposit

Remarks

1Ningbo Fubon Wood Co., Ltd.

3000 Flow loan 3000 3000

2Ningbo Domestic Daily Article Import & Export Co., Ltd.

42750Flow loan 10086Yincheng 16824

Re-guarantee 200024385.20

3Ningbo Hengheng International Trade Co., Ltd.

Exchange 1293.94 1293.94

4Ningbo Fubang Wood Co., Ltd.

5780

Exchange 1064.72Yincheng 8000Issuing 208.10

Paying for another 628.25

3632.90

5Ningbo Yujiang Special Adhesive Tape Co., Ltd.

2500Discount 100

Yincheng 1186.76593.38

6Ningbo Fubang Greens Furniture Co., Ltd.

4000 - -

7Ningbo Hengrun Furniture Co., Ltd.

10114Yincheng 16350

Issuing 56.459848.21

8Ningbo Henrun Polymerization Co., Ltd.

11083.81

Flow loan 7000Discount 310

Yincheng 1182.98Issuing 649.65

Domestic Fufeiting 1941.18

8218

9Ningbo Henrun Plasticizer Co., Ltd.

5000 Flow loan 5000 5000

10Ningbo Fubon holding Group Co., Ltd.

18500 Flow loan 18500 18500

11Ningbo Fubon Green Furniture Co., Ltd.

5828 Yincheng 8670 5199.80

12Ningbo Fubon Plaza Investment Development Co., Ltd.

Loan 7500 7500bank

consortium

13Ningbo Fubang Systex Trade Co., Ltd.

1000 Yincheng 900 540

Total 113952.02 87711.42

2014 ANNUAL REPORT

92


(IV) Implementation of general related transaction, major related transaction and

particularly major related transaction

In accordance with related laws and regulations, and Implementary Method of Related Transactions

of Bank of Ningbo Co., Ltd:

General related transactions is a transaction that the single batch of transaction amount between

the bank and the related party is lower than (including) 1% of the bank capital net amount or the

latest approved net asset (principle of taking lower, the same as below), and the transaction balance

of the bank and the related party after the transaction is lower than (including) 5% of the bank

capital net amount;

Major related transactions is a transaction that the single batch of transaction amount between

the bank and the related party is higher than 30,000,000 yuan (not including) and bank capital

net amount or the latest approved net asset is greater than 1% (not including), or the transaction

balance of the bank and the related party after the transaction is higher than (not including) 5% of

the bank capital net amount;

Particularly major related transactions is a transaction that the single batch of transaction amount

between the bank and the related party is higher than (not including) 5% of the bank capital net

amount or the latest approved net asset, or the transaction balance of the bank and the related

party after the transaction is 10% of the bank capital net amount.

According to the above definitions, up to December 2014, related transaction situations of Ningbo

Shanshan Co., Ltd., Youngor Group Co., Ltd., Ningbo Fubon Holding Group Co., Ltd., Ningbo

Development & Investment Co., Ltd. and Huamao Group Co., Ltd. are as follows:

1. Statics shows that, 6 general related transactions that transaction amounts accounting for more

than 0.2% of recent audited net capital of Ningbo Bank in the whole year of 2014;

2. Statics shows that, 310 major related transaction occurred in the whole year of 2014;

3. Statics shows that, no particularly major related transaction occurred in the whole year of 2014.

Depending on statistics of general related transaction, major related transaction and particularly

major related transaction in 2014, the approval program of the related credit business is accordant

with requirement of the board of directors on the related credit control.

(V) Transaction with Overseas-Chinese Bank Corporation and Related Party thereof

Depending on related regulations of Article VIII of Commercial Bank and Insider and Shareholder

Related Transaction Management Method issued by the China Banking Regulatory Commission,


93

commercial banks is not included in the related legal person of it. But in accordance with regulations

prescribed with related clauses of Stock Listing Rule of Shenzhen Stock Exchange approved by the

related party, the legal person holding more than 5% of shares belongs to the reorganization range

of the related party, therefore, the bank reports related transactions of Overseas-Chinese Bank

Corporation and Related Party thereof as follows:

Up to December 31st , 2014, we provide Overseas-Chinese Bank Corporation with credit limit to

RMB 2.4 billion yuan; at present, risk exposure of the bank is RMB 0.322 billion yuan, and pre-

settlement is RMB 0.146 billion yuan, interest exchange is RMB 0.039 billion yuan and share option

is RMB 0.137 billion yuan; we provide Overseas-Chinese Bank (China) Co., Ltd. with credit limit

to RMB 1.55 billion yuan; at present, risk exposure of the bank is RMB 0.468 billion yuan, pre-

settlement is RMB 0.140 billion yuan and interest exchange is RMB 0.328 billion yuan.

VIII．Major contract and implementation thereof

(I) Trusteeship, contract and rent issue situations

With the report period, the company is free from trusteeship, contract, rent and other major

contract issues.

(II) Guarantee situation

To the end of the report period, the balance of the company's guarantee business (letter

of guarantee) is 13480670000 yuan, and company's outward guarantee business is one of

conventional bank businesses approved by People's Bank of China and China Banking Regulatory

Commission.

(III) Other major contracts

With the report period, the company is free from other major contract issues.

(IV) Other major transactions

With the report period, the company is free from other major transactions.


2014 ANNUAL REPORT

94


IX. Commitment item implementwation

(I) Commitment issues of company or shareholder holding more than 5% shares within

report period or made before but lasting to the report period

Commitment issues

Commitment party

Commitment content

Commitment time

Commitment deadline

Performance situation

Commitment of share reform

- - - -

Commitment in purchase report or equity change report

- - - -

Commitment made in asset reformation

- - - -

Commitment of non-public development bank subscription object

Singapore

Overseas-

Chinese

Banking Co.,

Ltd., Ningbo

Development

Investment

Group Co., Ltd.

Since the date of

ending issuance,

do not transfer

the subscribed

shares within 60

months

Oct.8, 2014 60 months Strictly perform

Other commitments on company's middle and small shareholders

Corporate

Various measures

shall be adopted

to guarantee the

e f f e c t i v e u s e

of raised funds,

t o e f f e c t i v e l y

prevent diluted

r i sk o f r e tu rn

on demand and

improve return

capacity in the

future

July 16, 2014 Long term Strictly perform


95


Commitment issues

Commitment party

Commitment content

Commitment time

Commitment deadline

Performance situation

Other commitments on company's middle and small shareholders

Corporate

T h e C o m p a n y

w i l l e n h a n c e

handling force of

capital for debt

payment, follow

t h e p r i n c i p l e

o f max im i z i ng

the interests of

s h a r e h o l d e r s ;

t h e h a n d l i n g

procedures of 2

properties and 1

equity for debt

payment have

been completed

before the end of

2014

Aug.5, 2014 Dec.31, 2014

The handling

procedures of 2

properties and 1

equity for debt

payment have

been completed

before the end

of 2014

Commitment of whether to perform in real time

Yes

Unperformed specific reasons and next plan (if any)

Not applicable

(II) Capital expenditure commitmentUnit: (RMB) Thousand

Items 31 Dec. 2014 31 Dec.2013

Signed but not withdrawn 393,977 541,402

2014 ANNUAL REPORT

96


(IV) Asset pledge commitment

(III) Business rent commitment

Depending on rent contract with leaser, the minimum rent payment rate of irrevocable rent is as

follows:

X. Situation of appointing and dismissing accounting firm

(I) Current appointed accounting firm



Items 31 Dec. 2014 31 Dec.2013

Within 1 year (including) 279,575 249,168

1-2 years (including) 267,897 238,464

2-3 years (including) 249,021 226,256

Longer than 3 years 801,241 767,634

Total 1,597,734 1,481,522

Pledge asset content

Pledge asset face value

Pledge application

Pledge amountPledge expiring

date

Financial asset-bonds for sale

23,860,000Sell purchased financial asset amount-bond

21,408,970From Jan.4, 2015

to Mar.23, 2015

Expiring investment-government bond

4,420,000Sell purchased financial asset amount-bond

4,371,710From Jan.4, 2015

to Mar.11, 2015

Name of domestic accounting firm Ernst & Young

Reward of domestic accounting firm2,900,000 yuan, including 2,100,000 yuan of financial report audit and 80,000 yuan of internal control audit

Continuous service year of domestic accounting firm

6 years

Name of registered accountant of domestic accounting firm

Guo Hangxiang, Chen Sheng


97

(II) Within report period, the company not changes employment of accounting firm

(III) Situation on appointing internal control audit accounting firm, financial consultant or

sponsor

During the report period, Ernst & Young is employed as an internal auditing firm of the company,

and the company shall pay 800,000 yuan to it for the 2014 internal auditing.

During the report period, the company employs CITIC Securities Co., Ltd. As a sponsor.

During the report period, the company does not employ any financial consultant.

XI. Punishment and rectification

During the report period, in the Company and more than 5% of the shares fromt the director,

supervisor, senior management and shareholder holding are free from situations of being to

be investigated by authorities, judicial or discipline inspection departments to take coercive

measures, transferred to judicial organs be held criminally responsible, China Securities Regulatory

Commission to initiate an investigation or administrative penalties, to be ejected by the market,

be regarded as improper person, punishment of other administrative departments, or publicly

condemned by the stock exchange.

XII. Description on other major items

Within the reporting period, Beijing High People's Court judged that related settlement for debts

of Beijing Branch shall be resolved by MCC Paper Group Co., Ltd. For cautious consideration, up to

end of 2014, the Company reached corresponding provision and depreciation reserve on creditor's

right withdrawl 0.275 billion yuan.

XIII. Specific description and independent suggestion of company's independent

directors on capital occupation of company's outward guarantee and company

holding shareholder or other related parties

Adhering to No.56 document [2003] issued by China Securities Regulatory Commission, as an

independent director, with the altitude of being fiar, just and object, the company's outward

guarantee and situation that company controlling shareholder and other related parties occupying

the capital are verified. We think that:


2014 ANNUAL REPORT

98


(I) Company's outward guarantee business is one of conventional banking businesses approved

by China Securities Regulatory Commission and China People's Bank. Up to December 31st , 2014,

guarantee business balance of the company is 13480670000 yuan. The company pays attention

to risk management of the business, and strictly implements related operation procedure and

approval program, so that the risk of outward guarantee business has been effectively controlled.

To December 31st , 2014, the company carefully obeys to related regulations of [2003] No.56

document issued by China Securities Regulatory Commission, and is free from situation of

guarantee against regulation.

(II) To December 31st , 2014, the company is free from situation when the controlling shareholders

or other related parties occupy the company's capital.

Independent directors: Tang Sining, Zhu Jiandi, Yang Xiaoping

Fu Jianhua, Fu Jijun, Ben Shenglin


99

Chapter Eight Changes in Share Capital and Shareholding

I. Conditions of share change

II. Sheet on limited sale share change

Before current change Increment/decrement of current change Increment/decrement of current change After current change

Quantity Proportion New share issuing

Share donation Accumulationn fund turn Other Subtotal Quantity Proportion

I. Limited sale condition share 12,541,992 0.43% 366,007,872 - - -1,238,053 364,769,819 377,311,811 11.61%

1. National holding - 0.00% - - - - - - 0.00%

2. State-owned legal person holding - 0.00% 158,462,192 - - - 158,462,192 158,462,192 4.88%

3. Other domestic capital holding 12,541,992 0.43% - - - -1,238,053 -1,238,053 11,303,939 0.35%

wherein: domestic legal person holding - 0.00% - - - - - - 0.00%

domestic natural person holding 12,541,992 0.43% - - - -1,238,053 -1,238,053 11,303,939 0.35%

4. Foreign holding - 0.00% 207,545,680 - - - 207,545,680 207,545,680 6.39%

wherein: foreign legal person holding - 0.00% 207,545,680 - - - 207,545,680 207,545,680 6.39%

foreign natural person holding - 0.00% - - - - - - 0.00%

III. Limit-free condition share 2,871,278,537 99.57% - - - 1,238,053 1,238,053 2,872,516,590 88.39%

1. RMB ordinary share 2,871,278,537 99.57% - - - 1,238,053 1,238,053 2,872,516,590 88.39%

2. Domestically listed foreign-invested stock

- 0.00% - - - - - - 0.00%

3. Aboard listed foreign-invested stock - 0.00% - - - - - - 0.00%

4. Others - 0.00% - - - - - - 0.00%

III. Total shares 2,883,820,529 100% 366,007,872 - - - 366,007,872 3,249,828,401 100.00%

Name of shareholderLimited sale shares at the beginning of

the year

Limited sale shares terminated in the year

Increased limited sale shares in the

year

Limited sale shares in the

end of yearReason for limited sale Terminating date for

limited sale

Singapore Overseas-Chinese Banking Co., Ltd. - - 207,545,680 207,545,680Non-public offered

subscription share limited saleOct.8, 2019

Ningbo Development Investment Group Co., Ltd.

- - 158,462,192 158,462,192Non-public offered


Company's directors, supervisors and senior managers holding

12,541,992 1,238,053 - 11,303,939Senior management locked

share

In-office directors, supervisors and senior

managers shall transfer 25% of shares to the greatest

extent within 1 year

Total 12,541,992 1,238,053 364,769,819 377,311,811

2014 ANNUAL REPORT

100

Chapter Eight Changes in Share Capital and Shareholding (continued)

Measured by: share

Measured by: share

Before current change Increment/decrement of current change Increment/decrement of current change After current change

Quantity Proportion New share issuing

Share donation Accumulationn fund turn Other Subtotal Quantity Proportion

I. Limited sale condition share 12,541,992 0.43% 366,007,872 - - -1,238,053 364,769,819 377,311,811 11.61%

1. National holding - 0.00% - - - - - - 0.00%

2. State-owned legal person holding - 0.00% 158,462,192 - - - 158,462,192 158,462,192 4.88%

3. Other domestic capital holding 12,541,992 0.43% - - - -1,238,053 -1,238,053 11,303,939 0.35%

wherein: domestic legal person holding - 0.00% - - - - - - 0.00%

domestic natural person holding 12,541,992 0.43% - - - -1,238,053 -1,238,053 11,303,939 0.35%

4. Foreign holding - 0.00% 207,545,680 - - - 207,545,680 207,545,680 6.39%

wherein: foreign legal person holding - 0.00% 207,545,680 - - - 207,545,680 207,545,680 6.39%

foreign natural person holding - 0.00% - - - - - - 0.00%

III. Limit-free condition share 2,871,278,537 99.57% - - - 1,238,053 1,238,053 2,872,516,590 88.39%

1. RMB ordinary share 2,871,278,537 99.57% - - - 1,238,053 1,238,053 2,872,516,590 88.39%

2. Domestically listed foreign-invested stock

- 0.00% - - - - - - 0.00%

3. Aboard listed foreign-invested stock - 0.00% - - - - - - 0.00%

4. Others - 0.00% - - - - - - 0.00%

III. Total shares 2,883,820,529 100% 366,007,872 - - - 366,007,872 3,249,828,401 100.00%

Name of shareholderLimited sale shares at the beginning of

the year

Limited sale shares terminated in the year

Increased limited sale shares in the

year

Limited sale shares in the

end of yearReason for limited sale Terminating date for

limited sale

Singapore Overseas-Chinese Banking Co., Ltd. - - 207,545,680 207,545,680Non-public offered



- - 158,462,192 158,462,192Non-public offered


Company's directors, supervisors and senior managers holding

12,541,992 1,238,053 - 11,303,939Senior management locked

share

In-office directors, supervisors and senior

managers shall transfer 25% of shares to the greatest

extent within 1 year

Total 12,541,992 1,238,053 364,769,819 377,311,811


101

III. Situation on security issuing and listing

(I) Historical security issuance in nearly three years of the end of report period

Name of stock and derivative security

Issue dateIssue price (or interest rate)

Issue quantity Listing dateQuantity of the

acquired listing transaction

Ordinary share

2014 private issued stock

Sep.30, 2014 8.45 yuan/share366,007,872

sharesOct.8, 2014

366,007,872 shares

Stock type

2012 Bank of Ningbo subordinate bond

Nov.22, 2012 5.75%

30,000,000 pieces(face

amount: 100 yuan)

Nov.26, 201230,000,000

pieces

2013 Bank of Ningbo Financial Bonds Class I

Apr.16, 2013 4.70%


amount: 100 yuan)

Apr.18, 201350,000,000

pieces

2013 Bank of Ningbo Financial Bonds Class II

Apr.16, 2013 5.13%


amount: 100 yuan)

Apr.18, 201330,000,000

pieces

Specification Description on historical security issuance in previous three years:

1. Approved by the China Securities Supervision Commision on the Approval of Private Issued

Stock of bank of Ningbo Co., Ltd. (Zhengjianxuke [2014] No.910), the Company privately issued

366,007,872 RMB ordinary shares (A share) to Ningbo Development Investment Group Co., Ltd.

and Singapore Overseas-Chinese Banking Co., Ltd. in September, 2014, face amount per share is

RMB 1 yuan per share, issue price is RMB 8.45 yuan per share, total raised fund reaches to RMB

3,092,766,518.40 yuan, after deducting the issue expenses such as sponsoring and underwriting

expenses, the net amount of actual raised funds for the new privately issued shares is RMB

3,076,511,485.27 yuan, totally for enriching the capital fund of the Company. The private shares

are listed on Oct.8, 2014; since the date of ending the issuance, assignment of the subscribed

equity within 60 months is not allowed.

2. Approved by Official Reply of China Banking Regulatory Commission on Issuing Subordinated

Bonds by Bank of Ningbo (yinjianfu [2012] No.353) and the Administrative Licensing Decision

of People's Bank of China (yinshichangxuzhunyuzi [2012] No.61), the company publically issued


2014 ANNUAL REPORT

102

the 2012-year Bank of Ningbo Co subordinated bonds of 3 billion yuan to national inter-bank

bond market from November 22 to November 26 in 2012 . The bonds are publically issued in the

national inter-bank bond market in the form of book building or centralized sale way, where the

underwriting syndicate are organized by the major underwriter. The bonds belong to 15-year fixed-

rate variety, issuer who owns the redemption right with prerequisites at the end of the 10th year

can see the a coupon rate of 5.75%.

3. Approved by Official Reply of China Banking Regulatory Commission on Issuing Financial Bonds

by Bank of Ningbo (yinjianfu [2012] No.502) and the Administrative Licensing Decision of People's

Bank of China (yinshichangxvzhunyuzi [2013] No.7), the company publically issued the 2013-year

Bank of Ningbo Co., Ltd financial bonds of 8 billion yuan to national inter-bank bond market from

April 16 to April 18 in 2013. The bonds are divided into two categories. One is categorized as the

5-year fixed-rate variety, whose actual issue amount is 5 billion yuan with a coupon rate of 4.70%;

While the other is of the 10-year fixed-rate variety, whose actual issue amount is 3 billion yuan with

a coupon rate of 5.13%. The bonds are publically issued in the national inter-bank bond market in

the form of book building or centralized sale way, where the underwriting syndicate are organized

by the major underwriter.

(II) Specification on changes of company's total share amount, shareholder structure as

well as company's asset and liability structure change

Approved by the China Securities Regulatory Commission Zhengjianxuke [2014] No.910, the

Company privately issued 366,007,872 RMB ordinary shares (A share) to Ningbo Development

Investment Group Co., Ltd. (consistent acting person with Ningxing (Ningbo) Assets Management

Co., Ltd.) and Singapore Overseas-Chinese Banking Co., Ltd. The newly added shares were

registered to the account on September 30, 2014, formally listed into the Company's shareholder

list of and ted in Shenzhen Stock Exchange on October 8, 2014. After the private issuance, the

total number of the Company shares were increased to 3,249,828,401shares.

(III) Situation on existing internal staff share

Within the report period, there are no internal staff share.



103

Total quantity of shareholders to the end of report period(Account)

119,702

Total quantity of shareholders to the end of previous 5th

transaction day before disclosure date of the

annual report

135,309

Total number of preferred stockholders recovering

voting power at the end of reporting period (Account)

-

Situation on shareholders holding more than 50% of shares or top ten shareholders

Name of shareholder Shareholder natureShare holding

proportion

Share holding quantity to the end of report

period

Situation on increment/decrement change within report

period

Share quantity with limited sale

condition

Share quantity without sale

condition

Situation on pledge or freezing

Share state

Quantity

Singapore Overseas-Chinese Banking Co., Ltd.

Overseas legal person 18.58% 603,866,209 207,545,680 207,545,680 396,320,529


State-owned legal person

13.18% 428,462,192 158,462,192 158,462,192 270,000,000

Youngor Group Co., Ltd.Domestic non-state-owned legal person

10.93% 355,182,621 63,832,533 - 355,182,621

Ningbo Power Development Co., Ltd.


6.82% 221,503,488 - - 221,503,488 Pledge 162,000,000

Huamao Group Co., Ltd.Domestic non-state-owned legal person

6.15% 200,000,000 -40,000,000 - 200,000,000 Pledge 119,000,000

Ningbo Shanshan Co., Ltd.

Domestic non-state-owned legal person

5.03% 163,450,203 -15,549,797 - 163,450,203

Ningbo Futon Holding Group Co., Ltd.


4.52% 146,740,000 -54,564,200 - 146,740,000 Pledge 126,340,000

Zhuoli Electric Appliance Group Co., Ltd.


1.66% 54,000,000 - - 54,000,000 Pledge 54,000,000

Singapore Overseas-Chinese Banking Co., Ltd. (QFII)

Overseas legal person 1.42% 46,099,471 - - 46,099,471

Ningxing (Ningbo) PropertyManagement Co., Ltd.


1.38% 44,750,000 - - 44,750,000

IV. Situation on shareholder and actual controller

(I) Situation on company's shareholder quantity and share holding


2014 ANNUAL REPORT

104

Total quantity of shareholders to the end of report period(Account)

119,702

Total quantity of shareholders to the end of previous 5th

transaction day before disclosure date of the

annual report

135,309

Total number of preferred stockholders recovering

voting power at the end of reporting period (Account)

-

Situation on shareholders holding more than 50% of shares or top ten shareholders

Name of shareholder Shareholder natureShare holding

proportion

Share holding quantity to the end of report

period

Situation on increment/decrement change within report

period

Share quantity with limited sale

condition

Share quantity without sale

condition

Situation on pledge or freezing

Share state

Quantity


Overseas legal person 18.58% 603,866,209 207,545,680 207,545,680 396,320,529



13.18% 428,462,192 158,462,192 158,462,192 270,000,000

Youngor Group Co., Ltd.Domestic non-state-owned legal person

10.93% 355,182,621 63,832,533 - 355,182,621



6.82% 221,503,488 - - 221,503,488 Pledge 162,000,000

Huamao Group Co., Ltd.Domestic non-state-owned legal person

6.15% 200,000,000 -40,000,000 - 200,000,000 Pledge 119,000,000



5.03% 163,450,203 -15,549,797 - 163,450,203

Ningbo Futon Holding Group Co., Ltd.


4.52% 146,740,000 -54,564,200 - 146,740,000 Pledge 126,340,000

Zhuoli Electric Appliance Group Co., Ltd.


1.66% 54,000,000 - - 54,000,000 Pledge 54,000,000


Overseas legal person 1.42% 46,099,471 - - 46,099,471

Ningxing (Ningbo) PropertyManagement Co., Ltd.


1.38% 44,750,000 - - 44,750,000

Measured by: share



105

according to the Approval of Property Right Transfer of Ningbo Power Development Co., Ltd. by Ningbo SASAC (Yongguoziweiban [2005] No.28), the property right of Ningbo Power Development Co., Ltd. is integrally transferred to Ningbo Development Investment Group Co., Ltd. as wholly-owned subsidiary subordinated to Ningbo Development Investment Group Co., Ltd., and the property right transfer matter has been completed on March 2015.

Notes:

Situation on share holding of the top ten shareholders without limited sale condition

Name of shareholderShare quantity without limited sale

condition to the end of year

Stock Class

Stock Class Quantity

Singapore Overseas-Chinese Banking Co., Ltd. 396,320,529 RMB ordinary share 396,320,529

Youngor Group Co., Ltd. 355,182,621 RMB ordinary share 355,182,621

Ningbo Development Investment Group Co., Ltd. 270,000,000 RMB ordinary share 270,000,000

Ningbo Power Development Co., Ltd. 221,503,488 RMB ordinary share 221,503,488

Huamao Group Co., Ltd. 200,000,000 RMB ordinary share 200,000,000

Ningbo Shanshan Co., Ltd. 163,450,203 RMB ordinary share 163,450,203

Ningbo Fubon Holding Group Co., Ltd. 146,740,000 RMB ordinary share 146,740,000

Zhuoli Electric Appliance Group Co., Ltd. 54,000,000 RMB ordinary share 54,000,000


46,099,471 RMB ordinary share 46,099,471

Ningxing (Ningbo) Property Management Co., Ltd


Description on relationship or consistent activities among top ten circulating shareholders without limited sale as well as top ten circulating shareholders without limited sale and among top ten shareholders

Ningbo Power Development Co., Ltd. is wholly-owned subsidiary subordinated to Ningbo Development Investment Group Co., Ltd.; Ningbo Development Investment Group Co., Ltd.

and Ningxing (Ningbo) Assets Management Co., Ltd. are consistent acting persons; Singapore Overseas-Chinese Banking Co., Ltd. (QFII) is a qualified domestic institution investor of Singapore

Overseas-Chinese Banking Co., Ltd.

Description on shareholders attending securities margin trading None

Description on related relations or consistent activities of previous shareholders


and Ningxing (Ningbo) Assets Management Co., Ltd. are consistent acting persons; Singapore Overseas-Chinese Banking Co., Ltd. (QFII) is a qualified oversea institution investor of Singapore



2014 ANNUAL REPORT

106

Situation on share holding of the top ten shareholders without limited sale condition

Name of shareholderShare quantity without limited sale

condition to the end of year

Stock Class

Stock Class Quantity

Singapore Overseas-Chinese Banking Co., Ltd. 396,320,529 RMB ordinary share 396,320,529

Youngor Group Co., Ltd. 355,182,621 RMB ordinary share 355,182,621

Ningbo Development Investment Group Co., Ltd. 270,000,000 RMB ordinary share 270,000,000

Ningbo Power Development Co., Ltd. 221,503,488 RMB ordinary share 221,503,488

Huamao Group Co., Ltd. 200,000,000 RMB ordinary share 200,000,000

Ningbo Shanshan Co., Ltd. 163,450,203 RMB ordinary share 163,450,203

Ningbo Fubon Holding Group Co., Ltd. 146,740,000 RMB ordinary share 146,740,000

Zhuoli Electric Appliance Group Co., Ltd. 54,000,000 RMB ordinary share 54,000,000



Ningxing (Ningbo) Property Management Co., Ltd


Description on relationship or consistent activities among top ten circulating shareholders without limited sale as well as top ten circulating shareholders without limited sale and among top ten shareholders


and Ningxing (Ningbo) Assets Management Co., Ltd. are consistent acting persons; Singapore Overseas-Chinese Banking Co., Ltd. (QFII) is a qualified domestic institution investor of Singapore


Description on shareholders attending securities margin trading None

Description on related relations or consistent activities of previous shareholders


and Ningxing (Ningbo) Assets Management Co., Ltd. are consistent acting persons; Singapore Overseas-Chinese Banking Co., Ltd. (QFII) is a qualified oversea institution investor of Singapore




107

100%

100%

13.18%18.58% 10.93% 6.82% 6.15% 5.03% 39.31%

Ningbo Development & Investment Co., Ltd.

Youngor Group Co., Ltd.


Huamao Group Co., Ltd.


Other shareholders holding lower than 5% of shares


Ningbo State-owned Asset Supervision & Management Committee

Ningbo Banking Co., Ltd.

(V) Legal person shareholders having more than 5% of shares

1. Ningbo Power Development Co., Ltd.

Ningbo Power Development Co., Ltd. is a state-owned enterprise established on October 24,

1994, on Floor 16-22 , Fazhan Mansion Tower B, No. 187, Chang(yue)le Road, Jiangdong District,

Ningbo, with registered capital of 589,380,000 yuan; where the legal representative is Lee Chung

and organization code is 25407098-1; The business scope includes: Business Project investment

, electricity energy development, coal processing power collaboration; metallic materials, mineral

products (except professional products), mechanical and electrical equipment (except cars),

building materials, electrical machinery and equipment.

2. Huamao Group Co., Ltd.

Huamao Group Co., Ltd. is a joint stock limited company established on October 13, 2000,

Within the reporting period, the Company is free from agreed repurchase transaction among top

ten shareholders without limited sale and top ten shareholders.

(II) Situation on company's holding shareholder

The company is free from holding shareholder to the end of the report period.

(III) Situation on company's actual controller

The company has no actual controller within the report period.

(IV) Company's shareholding structure chart

At the end of the reporting period, Company's shareholding structure chart shows as follows:


2014 ANNUAL REPORT

108

in Wangchun Industrial Park, Haishuximen District, Ningbo Zhejiang with registered capital of

56,000,000 yuan; where the legal representative is Xu Wanmaoand organization code is 72513027-

5; The business scope includes: general business items: business project investment; textiles,

clothing manufacturing; furniture manufacturing; wholesale and retail of cultural & sporting

goods ; estate development and management; real estate agency; property management, hotel

management; construction; landscaping; warehousing services; machinery and equipment rental,

rental housing; goods information consulting, computer equipment maintenance, application

technology consulting services, business management consulting; proprietary trading and the

agency for the import and export for all kinds of of goods and technology, but except for

technologies and goods that the state limits the business or prohibit their import and export.

3. Ningbo Shanshan Co., Ltd.

Ningbo Shanshan Co., Ltd. is a oriented pilot enterprise of joint-stock system approved by

Yongtigai (1992) Document NO.27 of Ningbo Economic Restructuring Office on November 27,

1992. It issued listing of domestic shares (A share) to the public and began the listed exchange in

Shanghai Stock Exchange in January, 1996. The company is registered in No. 238, Yunlin Middle

Road, Wangchun Industrial Park, Ningbo, Zhejiang Province, with registered capital of 410,858,200

yuan; wherelegal representative is ZHUANG Weiand organization code is 70480305-5;business

scope includes: clothing, knitwear, leather productsmanufacturing, processing, wholesaleand retail;

trademark licensing fee; proprietary trading and the agency for the import and export of all kinds

of goods and technology, but except for the technologies and goods that the states limits the

business or prohibits their import and export; the manufacturing, processing, wholesale, retail of

the lithium battery materials; housing lease; the investment of business projects.

(VI) Corporate shareholders holding g more than 10% shares

Name of corporate shareholder

Legal representative/

unit leader

Date of establishment

Organization code

Issued capital stock

Major business or management

activity


Huang SanguangOctober 31,

1992None

Singapore Dollar

13.752 billion yuan

Financial service industry


Dai ZhiyongNovember 12,

199214407480-X

RMB 2.2 billion yuan

Project investment,

assets management,

real estate development,

property management and

so on



109

Name of legal person shareholder

Legal representative/

unit leader

Date of establishment

Organization code

Issued capital stock

Major business or management

activity

Youngor Group Co., Ltd.

Li Rucheng June 25, 1993 70480069-8

RMB 2.227 billion yuan

Garment production, real estate

development, project

investment and so on

1. Singapore Overseas-Chinese Banking Co., Ltd.

Singapore Overseas-Chinese Banking Co., Ltd. is a local bank which is established in earliest time in

Singapore, merged by three overseas-China banks in 1932 the earliest bank of which is established

in 1912. From the perspective of asset scale, Singapore Overseas-Chinese Banking Co., Ltd. is

ranked as the second biggest financial service group in Southeast Asia and is one of world's banks

enjoying the highest appraise, possessing Moody Aa1 rate. Based on the widely approved financial

strength and stability, the Singapore Overseas-Chinese Banking Co., Ltd. is always rated as one of

the strongest and safest banks throughout the world by famous market research companies and

magazines.

Singapore Overseas-Chinese Banking Co., Ltd. and its subsidiary thereof provide all-around

professional financial and wealth management services to customers, including personal business,

company business, investment business, private bank business, transaction bank business, capital

business, insurance, asset management and stockbroking business. Up to December 31, 2014,

Singapore Overseas-Chinese Banking Co., Ltd. owned 401,200,000,000 Singapore Dollar (about

RMB 1,878,400,000,000 yuan depending on exchange rate at that time), and had net asset of

34,200,000,000 Singapore Dollar (about RMB160,000,000,000 yuan depending on exchange rate at

that time. Singapore Overseas-Chinese Banking Co., Ltd. explores its market to Singapore, Malaysia,

Indonesia and Great China. In 18 countries and regions, the Singapore Overseas-Chinese Banking

Co., Ltd. has more than 630 branches and representative offices, including about 330 branches and

offices of its subsidiary OCBC NISP in Indonesia, as well as 95 branches and offices of Wing Hang

Bank in Hong Hong, China and Macao. Overseas-Chinese Wing Hang Bank (original Hong Kong

Wing Hang Bank) became wholly-owned subsidiary of Singapore Overseas-Chinese Banking Co., Ltd.

in October, 2014.

Private banking service of the Singapore Overseas-Chinese Banking Co., Ltd. is offered by its

subsidiary, named as Bank of Singapore. Bank of Singapore has been recognized among the

industry, is honored as an Asian International private bank and is rated as "2014 Outstanding

Private Bank in Southeast Asia" by International Private Banker.

As subsidiary company of Bank of Singapore, the Great Eastern Holdings is recognized as the


2014 ANNUAL REPORT

110

biggest insurance group in Singapore and Malaysia from the view of assets scale and market share;

and the Lion Global Investors, as its subordinated assets management company, is one of the

biggest assets management companies in Southeast Asia.

Overseas-Chinese Banking (China) Co., Ltd. (Overseas-Chinese Banking China) is formally

established on August 1, 2007; the Overseas-Chinese Banking China, which is headquartered in

Shanghai is a wholly-owned subsidiary of Singapore Overseas-Chinese Banking Co., Ltd.

Since the establishment of its first branch in Xiamen in 1925, Overseas-Chinese Banking always

keeps its on-going business in China. Within the 90 years, Overseas-Chinese Banking insists on

its business and service in China; our company is also one of the four foreign-invested banks

continuously operated in Chinese Mainland after 1949.

The registered capital of Overseas-Chinese Banking China is RMB 3.5 billion Yuan (about

698000000 Singapore Dollar). At present, Overseas-Chinese Banking China has employed more

than 800 employees, including Shanghai Headquarter and 17 branches in Beijing, Xiamen,

Guangzhou, Chengdu, Chongqing, Tianjin and Shaoxing.

2. Ningbo Development & Investment Co., Ltd.

Ningbo Development & Investment Co., Ltd. is a wholly state-owned limited liability company

established on November 12, 1992, on Floor 16-22 , Fazhan Mansion Tower B, No. 187, Chang(yue)

le Road, Jiangdong District, Ningbo; whose legal representative is Lee Chung and organization

code is 14407480-X; business scope includes: project investment, asset management, real estate

development, property management; house leasing of the Company; building and decorating

materials, wholesale and retail of electrical and mechanical equipment.

3. Youngor Group Co., Ltd.

Youngor Group Co., Ltd., established in June 25, 1993, is a stock liability company listed in

Shanghai Stock Exchange, registered in No.2, West Yinxian Road, Yinzhou District, Ningbo, Zhejiang

Province, with registered capital of 2,226,611,695 yuan; whose legal representative is LI Rucheng

and organization code is 70480069-8; business scope includes: apparel manufacturing; technical

consultancy ; real estate development; project investment; warehousing; wholesale and retail of

textiles, metal materials, chemical products, building materials, mechanical and electrical products,

home appliances, electronic equipment; proprietary trading and the agency for the import and

export of goods and technology, but except for the technologies and goods that the state limits the

business or prohibits its import and export.

V. Situation of proposing or implementing shareholding increasing plan raised by the company's shareholders and persons acting in concert

Within the report period, company's shareholders and persons acting in concert do not propose or

implement any shareholding increasing plan.



111

Chapter Nine Directors, Supervisors, Senior Manager and Basic Information on Employees

Name Position Status Gender Age Term Start date Term Ending date

Shares held at the

beginning of year(share)

Increase of shareholding

in the year(share)

Decrease of shareholding

in the year(share)

Shares held at

year end

Lu Huayu Director, chairman incumbent male 50 February 10, 2014 February 9, 2017 2,531,250 - 632,813 1,898,437

Luo Mengbo Director, vice chairman, president incumbent male 44 February 10, 2014 February 9, 2017 1,828,000 - 307,000 1,521,000

Yu Fengying Director, vice chairman incumbent female 56 February 10, 2014 February 9, 2017 1,613,671 - 403,418 1,210,253

Hong Lifeng Director, vice president incumbent male 50 February 10, 2014 February 9, 2017 2,631,039 - 657,760 1,973,279

Shi Lizhong Director resigned male 59 February 10, 2014 February 9, 2017 13,500 - 3,375 10,125

Dai Zhiyong Director resigned male 43 January 14, 2011 February 9, 2017 - - - -

Yu Weiye Director incumbent male 51 February 10, 2014 February 9, 2017 - - - -

Sun Zequn Director incumbent male 63 February 10, 2014 February 9, 2017 - - - -

Chen Yongming Director incumbent male 55 February 10, 2014 February 9, 2017 - - - -

Song Hanping Director incumbent male 51 February 10, 2014 February 9, 2017 - - - -

Li Rucheng Director resigned male 63 January 14, 2011 February 9, 2014 - - - -

Chen Guanghua Director incumbent male 54 February 10, 2014 February 9, 2017 - - - -

Xv Lixun Director incumbent male 40 February 10, 2014 February 9, 2017 - - - -

Li Hanqiong Director incumbent female 37 February 10, 2014 September 10, 2014 - - - -

Cai Laixing Independent director resigned male 72 February 10, 2014 September 10, 2014 - - - -

Xie Qingjian Independent director resigned male 70 February 10, 2014 September 10, 2014 - - - -

Tang Sining Independent director incumbent male 66 February 10, 2014 February 9, 2017 - - - -

Li Yunqi Independent director resigned male 63 February 10, 2014 February 9, 2014 - - - -

Zhu Jiandi Independent director incumbent male 49 February 10, 2014 February 9, 2017 - - - -

Yang Xiaoping Independent director incumbent female 63 February 10, 2014 February 9, 2017 - - - -

Fu Jianhua Independent director incumbent male 63 September 11, 2014 February 9, 2017 - - - -

Fu Jijun Independent director incumbent male 57 September 11, 2014 February 9, 2017 - - - -

Ben Shenglin Independent director incumbent male 48 September 11, 2014 February 9, 2017 - - - -

Zhang HuiEmployees' representative,

Supervisory incumbent male 54 February 10, 2014 February 9, 2017 2,268,750 - 567,188 1,701,562

Xv Liming Supervisor incumbent male 52 February 10, 2014 February 9, 2017 - - - -

Chen Zhongjing Supervisor resigned male 52 January 14, 2011 February 9, 2014 - - - -

Liu Suying External supervisor incumbent female 69 February 10, 2014 February 9, 2017 - - - -

Zhang Yingfang External supervisor incumbent female 63 February 10, 2014 February 9, 2017 - - - -

Pu Yiwei External supervisor incumbent female 44 February 10, 2014 February 9, 2017 - - - -

Shen DongEmployees' representative,

supervisorresigned male 34 January 14, 2011 February 9, 2014 1,500 - - 1,500

Yu NingningEmployees' representative,

supervisorincumbent male 38 February 10, 2014 February 9, 2017 - - - -

I. Changes on shareholding among directors, supervisors and senior manager

2014 ANNUAL REPORT

112


Shares held at the



in the year(share)


in the year(share)

Shares held at

year end

Lu Huayu Director, chairman incumbent male 50 February 10, 2014 February 9, 2017 2,531,250 - 632,813 1,898,437

Luo Mengbo Director, vice chairman, president incumbent male 44 February 10, 2014 February 9, 2017 1,828,000 - 307,000 1,521,000

Yu Fengying Director, vice chairman incumbent female 56 February 10, 2014 February 9, 2017 1,613,671 - 403,418 1,210,253

Hong Lifeng Director, vice president incumbent male 50 February 10, 2014 February 9, 2017 2,631,039 - 657,760 1,973,279

Shi Lizhong Director resigned male 59 February 10, 2014 February 9, 2017 13,500 - 3,375 10,125

Dai Zhiyong Director resigned male 43 January 14, 2011 February 9, 2017 - - - -

Yu Weiye Director incumbent male 51 February 10, 2014 February 9, 2017 - - - -

Sun Zequn Director incumbent male 63 February 10, 2014 February 9, 2017 - - - -

Chen Yongming Director incumbent male 55 February 10, 2014 February 9, 2017 - - - -

Song Hanping Director incumbent male 51 February 10, 2014 February 9, 2017 - - - -

Li Rucheng Director resigned male 63 January 14, 2011 February 9, 2014 - - - -

Chen Guanghua Director incumbent male 54 February 10, 2014 February 9, 2017 - - - -

Xv Lixun Director incumbent male 40 February 10, 2014 February 9, 2017 - - - -

Li Hanqiong Director incumbent female 37 February 10, 2014 September 10, 2014 - - - -

Cai Laixing Independent director resigned male 72 February 10, 2014 September 10, 2014 - - - -

Xie Qingjian Independent director resigned male 70 February 10, 2014 September 10, 2014 - - - -

Tang Sining Independent director incumbent male 66 February 10, 2014 February 9, 2017 - - - -

Li Yunqi Independent director resigned male 63 February 10, 2014 February 9, 2014 - - - -

Zhu Jiandi Independent director incumbent male 49 February 10, 2014 February 9, 2017 - - - -

Yang Xiaoping Independent director incumbent female 63 February 10, 2014 February 9, 2017 - - - -

Fu Jianhua Independent director incumbent male 63 September 11, 2014 February 9, 2017 - - - -

Fu Jijun Independent director incumbent male 57 September 11, 2014 February 9, 2017 - - - -

Ben Shenglin Independent director incumbent male 48 September 11, 2014 February 9, 2017 - - - -

Zhang HuiEmployees' representative,

Supervisory incumbent male 54 February 10, 2014 February 9, 2017 2,268,750 - 567,188 1,701,562

Xv Liming Supervisor incumbent male 52 February 10, 2014 February 9, 2017 - - - -

Chen Zhongjing Supervisor resigned male 52 January 14, 2011 February 9, 2014 - - - -

Liu Suying External supervisor incumbent female 69 February 10, 2014 February 9, 2017 - - - -

Zhang Yingfang External supervisor incumbent female 63 February 10, 2014 February 9, 2017 - - - -

Pu Yiwei External supervisor incumbent female 44 February 10, 2014 February 9, 2017 - - - -

Shen DongEmployees' representative,

supervisorresigned male 34 January 14, 2011 February 9, 2014 1,500 - - 1,500

Yu NingningEmployees' representative,

supervisorincumbent male 38 February 10, 2014 February 9, 2017 - - - -

Chapter Nine Directors, Supervisors, Senior Manager andBasic Information on Employees（continued）


113

Liu RufenEmployees' representative,

supervisorincumbent female 49 February 10, 2014 February 9, 2017 223,300 - 55,825 167,475

Luo Weikai vice president, financial principal incumbent male 49 February 10, 2014 February 9, 2017 2,137,500 - 417,500 1,720,000

Khoo Seow Chiong vice president resigned male 53 January 14, 2011 February 9, 2014 - - - -

Fu Wensheng vice president incumbent male 42 February 10, 2014 February 9, 2017 - - - -

Wang Yongjie vice president incumbent male 42 February 10, 2014 February 9, 2017 205,000 - 50,000 155,000

Yang Chen Board Secretray incumbent male 53 February 10, 2014 February 9, 2017 1,485,578 - 371,395 1,114,183


Shares held at the



in the year(share)


in the year(share)

Shares held at

year end

II. Situation of taking office

(I) Major work experience of the current directors, supervisors and senior managers in the

latest 5 years

1. Directors

Mr. Lu Huayu, currently the Director of theBoard of Directors and the Chairman of Bank of Ningbo

Co., Ltd., born in September 1964, obtained a master degree in economics and the title of Senior

Accountant. Taking the job from July 1988, Mr. Lu used to work in Finance Bureau of Ningbo and

successively served as Assistant to Director & Vice Directorl of Administrative Bureau of State-

owned Property , Vice Director of Finance bureau of Ningbo. Mr. Lu was the President of Bank of

Ningbo from November 2000 to January 2005 and has been the Director and Chairman of Bank of

Ningbo since January 2005.

Mr. Luo Mengbo, currently the Director , Vice Chairman and President of the Bank of Ningbo

Co., Ltd., born in November 1970, obtained a bachelor's degree and the title of Economist. Mr. Luo

successively served as Business Inspector, Assistant General Manager and General Manager of

the Corporate Department of the Bank, General Manager of the Credit Management Department

of the Bank, President of Beilun Sub-branch of the Bank and General Manager of the Corporate

Department of the Bank. Mr. Luo was the Assistant President of the Bank from January 2008 to

January 2009 and has been the Vice President of the Company from January 2009 to October

2011 and the Director. He was the director and president of the company from Oct , 2011 to Feb,

2014, and is the director, vice chairman and the president of the company from Feb, 2014 till now.

Ms. Yu Fengying, currently the Director of the Board of Directorsand Vice Chairman of Bank

of Ningbo Co.,Ltd., born in March 1958, obtained a bachelor's degree and the title of Senior


2014 ANNUAL REPORT

114

Liu RufenEmployees' representative,

supervisorincumbent female 49 February 10, 2014 February 9, 2017 223,300 - 55,825 167,475

Luo Weikai vice president, financial principal incumbent male 49 February 10, 2014 February 9, 2017 2,137,500 - 417,500 1,720,000

Khoo Seow Chiong vice president resigned male 53 January 14, 2011 February 9, 2014 - - - -

Fu Wensheng vice president incumbent male 42 February 10, 2014 February 9, 2017 - - - -

Wang Yongjie vice president incumbent male 42 February 10, 2014 February 9, 2017 205,000 - 50,000 155,000

Yang Chen Board Secretray incumbent male 53 February 10, 2014 February 9, 2017 1,485,578 - 371,395 1,114,183


Shares held at the



in the year(share)


in the year(share)

Shares held at

year end

Economist. Taking the job from September 1980, Ms. Yu successively served as Branch Director

of Yinxian Finance & Tax Bureau, Vice President and President of Yinxian Sub-branch of Bank of

China, Vice Director of Ningbo Urban Credit Cooperative and Vice President of the Bank. Ms. Yu

was the President of the Bank and Ningbo Co., Ltd. from January 2005 to September 2011 and has

been the Vice Chairman of the Board of the Bank since September 2006.

Mr. Hong Lifeng, currently the Director of the Board of Directors and the Vice President of the

Bank of Ningbo Co.,Ltd., born in December 1964, obtained a master's degree and the title of Senior

Economist. Mr. Hong started to take the job in July 1986 and successively served as Vice President

of Bank of China Beilun Sub-branch, Vice Director of Credit Card Department & Loans Department

of Bank of China Ningbo Branch, Manager, Senior Manager, Head of China Department and

Commercial Banking Department of Hua Chiao Commercial Bank Ltd., Senior Manager of Mainland

Branches Banking Department of Bank of China (Hong Kong) Limited., Director of Settlement

Department of Bank of China, Ningbo Branch. Mr. Hong has been the Vice President of Bank of

Ningbo Co., Ltd. since January 2003 and the Director of the Bank since January 2005.

Mr. Yu Weiye, born in May, 1963, obtained the bachelor degree the title ofcertified accountant.

Mr. Yu currently serves as chief accountant of Ningbo Development Investment Group Co., Ltd. and

holds the position of director of Ningbo Thermal Power Co., Ltd. Mr. Yu was the chief accountant

of the finance department of Ningbo Electric Power Bureau, vice manager, general manager and

vice chief accountant of finance department of Ningbo Power Development Co., Ltd., vice chief

accountant of Ningbo Development Investment Group Co., Ltd.; from February, 2014, he was

appointed as director of the Company.

Mr. Sun Zequn, born in Aug, 1951, obtained the MBA degree in University of Chicago and a

bachelor's degree of science with honor in National University of Singapore. Mr. Sun joined OCBC

Chapter Nine Directors, Supervisors, Senior Manager and Basic Information on Employees（continued）


115

in 2002 and was the CFO of OCBC to June 2008. Mr. Sun was the President of the Investment

Department of OCBC from June 2008 to April 2010, in charge of strategic investment, non-core

investment and industry investment of OCBC. He served as CFO of the Group again in May 2010.

Mr. Sun retired in December 2011 and meanwhile,. and he has been the Director of the Company

since August 2006.

Mr. Chen Yongming, currently the President of OCBCHong Kong Branchand General Manager

of Northeast Asia Region of OCBC, born in Apr, 1959, obtained the MBA degree in University

of Chicago and a bachelor's degree in Georgetown University. Mr. Chen has been working in the

financial corporation and banking service industry in Singapore for nearly 10 years, and came to

China in 1995. Mr. Chen was the General Manager and Director of Shanghai Pica Colour Separation

& Printing Co., Ltd. From 1995 to 2004. Mr. Chen served as the General Representative of OCBC

Office in China, in charge of the management of OCBC business in China. Mr. Chen was the

Executive Director and President of OCBC Bank (China) Limited from Aug, 2007 to Sep 2009, and

has been the Director of the Company since January 2011 till now.

Mr. Song Hanping, currently the Chairman and CEO of Ningbo Fubang (Holdings) Ltd., and the

director of 81 Fubang (Ningbo) Basketball Club Co., Ltd., was born in July 1963, obtained a master's

degree and the title of Senior Economist. Mr. Song was successively served as the Vice General

Manager of Ningbo Bomei Zipper Co., Ltd., General Manager of Ningbo Yujiang Plastic Company

and Ningbo Yujiang Industrial Company, General Manager of Ningbo Hengrun Group, Vice General

Manager of Ningbo Second Light Machinery Group and General Manager & Chairman of Ningbo

Light Machinery Holding Group. Mr. Song has been the Director of the Company since January

2005.

Mr. Chen Guanghua, born in August 1960, obtained an associate's degree and the title of Senior

Economist. He is currently the Executive director of Shanshan Holding Co., Ltd., Executive Vice

President of Shanshan Group Co., Ltd. And the director of Ningbo Shanshan Co., Ltd. Mr. Chen

served as the financial director of Ningbo Yonggang Garment Factory, CFO of Ningbo Shanshan

Co., Ltd., CFO of Shanshan Group Co., Ltd. and Shanshan Investment Holdings Co., Ltd.. Mr. Chen

has been the Director of the Company since April 2010.

Mr. Xu Lixun, born in August 1974 and holds a Master's degree. He is currently the Executive

Director of the Board of Directors and President of Huamao Group Co., Ltd., and acts as Chairman

of Ningbo Huamao Cultural and Education Ltd, Chairman of Ningbo Huamao International Co., Ltd.,

Chairman of Zhejiang Quzhou Huamao Foreign Language School, Chairman of Zhejiang Longyou

Huamao Foreign Language School and Chairman of Beijing Rainbow Flower Educational Technology

Development Center. Mr. Xu Lixun served as Vice General Manager of American Huayuan Holding


2014 ANNUAL REPORT

116

Company, General Manager of American Taier Star Computer Co., Ltd. and Vice General Manager

of Beijing Rainbow Flower Educational Technology Development Center from August 1995 to June

1999; served as director of Huamao Group Co., Ltd. since June 1999; served as Assistant President

and Vice President of Huamao Group Co., Ltd. from June 1999 to December 2001; and served as

director of the Company since January 2012.

Ms. Li Hanqiong, born in December 1977, obtained a master degree, currently serves as the

director of Youngor Group Co., Ltd. and general manager of Youngor Investment Co., Ltd. Ms. Li

once was the vice general manager of Youngor (Hong Kong) Industry Co., Ltd. and vice general

manager of Shanghai Kaishi Investment Management Co., Ltd.; from January 2008 to January

2011, Ms. Li served as director of the 3rd board of directors; she takes the post of the Company's

director since February 2014.

Mr. Tang Sining, born in November 1948, obtained a doctor's degree of economics and the title

of Senior Economist. Mr. Tang was the Vice Director of Foreign Debt Information Office, Foreign

Investment Department of SAFE, Director General of General Office, Vice Director of Foreign

Investment Department of SAFE, Director General of Department of International Revenue and

Expenditure, Inspector of Census and Statistics Department of People's Bank of China, Director

General of Census and Statistics Department and Director of Advisory Office. He has been the

Independent Director of the Company since January 2011.

Mr. Zhu Jiandi: born in February 1955, is a certified public accountant registered in China and

senior economist with an educational background of doctorate. He is currently the principal

partner, President and Chief Accountant of Lixin Certified Public Accountants (special general

partnership), member of the Twelfth CPPCC National Committee, executive director of Chinese

Institute of Certified Public Accountants, Vice President of Shanghai Institute of Certified Public

Accountants, member of Internal Control Committee, Ministry of Finance, member of Accounting

Informationization Committee, Ministry of Finance, member of Listing Committee of Shanghai Stock

Exchange and member of Shanghai State-owned Enterprise Directors and Supervisors Certification

Committee. Mr. Zhu Jiandi has been in the profession of CPA for 28 years, he was President of Lixin

Certified Public Accountants Co., Ltd., deputy to the Twelfth Shanghai Municipal People's Congress

and member of the Eleventh Shanghai Municipal CPPCC in succession. Mr. Zhu Jiandi was awarded

with the honor of "Shanghai Outstanding Accounting Professionals" in 2005 and "National Advanced

Accounting Professionals" in 2008. He has served as independent director of the Company since

January 2011.

Ms. Yang Xiaoping, born in September 1951, is a senior economist with an educational

background of postgraduate. Ms. Yang Xiaoping was the Deputy Secretary and Secretary of



117

Youth League Committee of Hangzhou Steam Turbine Plant in succession, Secretary of Youth

League Working Committee of Hangzhou Administration of Machinery Industry, Deputy Secretary

of Party Committee, Deputy Factory Director and Party Committee member of Hangzhou Steam

Turbine Plant in succession, and Deputy Manager of Hangzhou Economic Development Corporation

( work as chair); Deputy Director of Management Inspection Department of Zhejiang Branch,

State Administration of Foreign Exchange, Deputy Director and Director of Foreign Investment

and Foreign Debt Management Office in succession, Director of Foreign Exchange Swap Center

and Director of Human Resources and Education Department and Director of Veteran Cadres

Department of Zhejiang Branch, People's Bank of China from November 1990 to December 1998;

member of Party Leadership Group, assistant commissioner and regulatory commissioner (cadre in

vice bureau level) of Hangzhou Financial Regulatory Office, Shanghai Branch, People's Bank of China

from December 1998 to July 2003; member of Preparatory Group of Zhejiang Regulatory Authority

of China Banking Regulatory Commission and Vice Director and member of Party Committee of

Zhejiang Regulatory Authority of China Banking Regulatory Commission from July 2003 to May

2006; Director and Secretary of the Party Committee of Fujian Regulatory Authority of China

Banking Regulatory Commission from May 2006 to August 2008; and Director and Secretary of

the Party Committee of Zhejiang Regulatory Authority of China Banking Regulatory Commission

from August 2008 to September 2011; and the independent director of the Company from January

2012 to the present.

Mr. Fu Jianhua, born in July 1951, is a master of economics, EMBA and senior economist,

currently serving as chairman of Shanghai Tonglian Financial Service Co., Ltd. and independent

director of Shangyin Fund Management Co., Ltd. Mr. Fu once took the posts of vice president of

Jiangxi Branch of China Construction Bank, office director and vice president of Shanghai Branch

of China Construction Bank, general manager of head office credit & loan management department

of China Construction Bank, vice president of Shanghai Branch and president of Pudong Branch of

China Construction Bank, president and chairman of Shanghai Bank, vice chairman and president of

Shanghai Pudong Development Bank, and chairman of SPD Silicon Valley Bank. Mr.Fu has been the

independent director of the Company since September 2014.

Mr. Fu Jijun, born in January 1957, is doctor of economic, senior economist and international

registered management consultant, currently serving as chairman of Chinese Financial Consulting

Co., Ltd., first management accounting consulting expert of the Ministry of Finance, standing

director of te board of governors of China Merger Union, vice chairman of Management Consulting

Committee of China Association of Enterprises, guest professor of International Business School

of Nankai University, guest professor of International Business School of University of International

Business and Economics, part-time professor of Dongbei University of Finance and independent


2014 ANNUAL REPORT

118

director of ABC-CA Fund Management Co., Ltd. Mr. Fu once worked as vice general manageer,

general mangers and other posts of Chinese Financial Consulting Co., Ltd.; since September 2014,

he is an independent director of the Company.

Mr. Ben Shenglin, born in January 1966, a doctor of economic, currently is the professor of

Management School of Zhejiang University, doctoral supervisor, director of EMBA Education Center

and executive presdient of Institute for International Monetary Affairs of Renmin University of

China. Mr. Ben once served as senior vice president of ABN AMRO and China general mangaer of

circulating fund business, China general manager and director general manager of HSBC industry

and commerce financial business, presdient of JPMorgan Chase (China) Co., Ltd. and member of

global leading group of global enterprise; since September 2014, he is an independent director of

the Company.

2. Supervisor

Mr. Zhang Hui, born in December 1960, obtained a bachelor's degree and the title of Senior

Economist. He currently is the Chairman of the Board of Supervisors of Bank of Ningbo Co., Ltd.

Mr. Zhang Hui successively served as a cadre of Ningbo Economic Research Center, Deputy

Secretary of Ningbo Government Economic Research Lab, Director and Secretary of the Party

Committee of Ningbo Yongxin Urban Credit Cooperative, President of Beilun Sub-branch of the

Bank. Mr. Zhang was the Vice President of the Bank from December 2000 to January 2005. He has

been the Chairman of the Board of Supervisors of Bank of Ningbo Co., Ltd. since January 2005.

Mr. Xu Liming, born in December 1962, obtained an associate's degree and the qualifications of

Accountant and Senior Economist. Mr. Xu currently is the Manager of Finance Department & CFO

of Zhejiang Cuori Electrical Appliances (Group) Co., Ltd. Mr. Xu was the Vice General Manager of

Cixi Engineering Consultation Construction Corporation from January 1997 to August 1999. He

was the Manager of Finance Department of Ningbo Swell Auto Decoration Co., Ltd. from September

1999 to March 2001. Mr. Xu has been the Manager of Finance Department & CFO of Zhejiang

Cuori Electrical Appliances (Group) Co., Ltd. since April 2001 and he has been the Supervisor of

Bank of Ningbo Co., Ltd. since January 2008.

Ms. Liu Suying is born in December 1945, She obtained a bachelor's degree and qualification

of Certified Public Accountant. Ms. Liu Suying worked in National Audit Office from July 1986 to

January 2004. During that period, she was the Deputy Director and Director of Administrative Audit

Office from 1986 to 1990, the Director of Agriculture and Forestry Education Department from

1990 to 1994, Director of Administrative Defense Department from 1994 to 1998, the Assistant

Director and Deputy Director Auditor of News Communication Audit Department from 1998 to



119

2004. Ms. Liu has been the Supervisor of Bank of Ningbo Co., Ltd. since January 2011.

Ms. Zhang Yingfang, born in January 1951, obtained an associate's degree and the title of Second

Grade Senior Judge. Ms. Zhang Yingfang served as Chief Justice and Secretary of Party Committee

of Yinxian People's Court from December 1992 to September 1997. She was the Vice President

(Deputy Director) of Ningbo Intermediate People's Court from September 1997 to September

2007, the Vice President (Director) of Ningbo Intermediate People's Court from September 2007

to January 2010, the Inspector of Ningbo Intermediate People's Court from January 2010 to

December 2010. She has been the Supervisor of Bank of Ningbo Co., Ltd. since January 2011.

Ms. Pu Yiwei, born in April 1970, a doctor of laws, is currently professor of Law School of Ningbo

University and master's supervisor. Ms. Pu graduated from Law Department of Southwest University

of Political Science and Law in 1992 and passed postgraduate examination of Civil Procedural

Law Major of Southwest University of Political Science and Law in the same year, obtained master

degree of law in 1995 and worked as a teacher in Ningbo University in July of the same year; in

September 2002, she became a doctoral candidate of Civil Law and Commercial Law Major of

Tsinghua University and obtained doctor degree of civil law and commercial law in 2005; from

September 2007 to September 2008, funded by K. C. Wong Education Foundation, visited Law

School of University of Toronto as a visiting scholar. She has been the external supervisor of the

Company since February, 2014.

Mr. Yu Ningning, born in December 1976, obtained a bachelor's degree. He is currently the Deputy

General Manager of the Compliance Department of Bank of Ningbo Co., Ltd. Mr. Yu worked in the

Assets Risk Management and Sales Department of ICBC Ningbo Branch. He has worked in the Risk

Management and Compliance Department of the Bank since October 2004. Mr. Yu has been the

Supervisor of the Bank of Ningbo Co., Ltd. since January 2011.

Ms. Liu Rufen, born in August 1965, obtained a bachelor degree, is currently the vice general

manager of Operation Department of the Company. Ms. Liu once served as chief accountant and

president assistant of Mingzhou Branch of the Company; from January 2000 to December 2004,

she worked as vice general manager of financial accounting department of the Company; since

January 2005, she is the vice general manager of the Operation Department of the Company, and

she has been supervisor of the Company since February 2014.

3. Senior manager

Mr. Luo Mengbo: See above

Mr. Hong Lifeng: See above


2014 ANNUAL REPORT

120

Mr. Luo Weikai, born in April 1965, obtained a master's degree and the title of Economist. He is

currently the Vice President of Bank of Ningbo Co., Ltd,. Mr. Luo started to work in Aug, 1984.He

used to work as the section chief and the assistant to the director of ICBC Ningbo Branch. After

serving in the Company, he acted as the Vice President of Tianyuan Sub-branch, then held the

position of the General Manager of Finance & Accounting Department and concurrently served as

the Director of the Banking Department of the Headquarters and the General Manager of E-banking

Department of the Bank. Mr. Luo was the Assistant President of the Bank from March 2005 to

August 2007. Mr. Luo was the Director of the Bank since August 2006 to September 2011. He is

the vice president of the Company from Aug 2007 till now.

Mr. Fu Wensheng, born in August 1972, obtained a master's degree and the title of Economist. He

is currently the Vice President of the Bank of Ningbo Co., Ltd. Mr. Fu was successively served as the

Office Secretary of the Bank of Shanghai, the Assistant President and the Vice President (presided

over the work) of the Bank of Shanghai Fuming Sub-branch, the President of the Bank of Shanghai

Jingan Sub-branch, the Vice President of the Bank of Ningbo Shanghai Branch, the President of the

Bank of Ningbo Beijing Branch. He has been the Assistant President of the Bank of Ningbo Co., Ltd.

from October 2011to August 2012 He has been the Vice President of the Company since August

2012.

Mr. Wang Yongjie, born in October 1972, obtained a bachelor's degree and the title of

Intermediate Economist. He is currently the Assistant President of the Bank of Ningbo Co., Ltd.

Mr. Wang Yongjie started working in Aug 1995, and was successively served as the loan teller and

Director of ABC Ningbo Branch Haishu Sub-branch Zhongshan Square Office, the Vice President of

the Bank of Ningbo Lingqiao Sub-branch, the Deputy General Manager ( work as chair) of the Risk

Management Department of the Bank, the General Manager of Personal Banking Department of the

Bank. During this period, Mr. Wang was also the General Manager of the Credit Cards Center of the

headquarters He has been the Assistant President of the Bank of Ningbo Co., Ltd. since from Oct,

2011 to Aug, 2012, and is now the vice president of the Company since August 2012.

Mr. Yang Chen, born in April 1961, obtained a bachelor's degree and the title of Senior Economist.

He is currently the Secretary to the Board of Directors of Ningbo Co., Ltd.. Mr. Yang started working

in Sep, 1982, and successively served as a cadre of Wenzhou Government Office, Wenzhou Longwan

District Party Committee Secretary Deputy Section Chief, a cadre of Wenzhou Government Office,

the Office Director Clerk of Ningbo Foreign Capital, the Deputy Director of Ningbo Government

Office. Mr. Yang has been the Office Director of the Bank since January 1996. During this period, he

was the Director and Secretary of the 2nd and 3rd Board of Directors from January 2005 to January

2011. He has been the Secretary of the 4th Board of Directors since October 2011.



121

(II) Positions of the Company's Directors, Supervisors and Senior Manager underthe

Shareholders Unit

Name of Staff Member

Name of Shareholders

Positions in Shareholders

UnitTerm of Office

Whether be remunerated

in Shareholders

unit or not

Yu Weiye

Ningbo Development and Investment Group

Co., Ltd

Chief accountantFrom July 2013 to

the presentYes

Chen YongmingSingapore Oversea-

Chinese Banking Corporation Ltd

General Manager in Northeast

Asian Region

From September 2009 to the present

No

Song HanpingNingbo Fubon

Holding Group Co., Ltd

Chairman of the Board and

President

From April 2002 to the present

Yes

Chen GuanghuaNingbo Shanshan

Co., LtdDirector


Yes

Xu LixunHuamao Group Co.,

Ltd.

Executive director,

president

From Jan, 2012 to the present

Yes

Li HanqiongYoungor Group Co.,

LtdDirector

From May 2011 to the present

Yes

Xu LimingZhuo Li Electric

Appliances Group Co., Ltd

Chief Financial Officer


Yes


2014 ANNUAL REPORT

122

(III) Positions of the Company's Directors, Supervisors and Senior Manager underother

Units


Name of other UnitsPositions in other Units

Term of Office


in other units or not

Yu WeiyeNingbo Thermal Power

Co., Ltd.Director

From December 2014 to the present

No

Sun Zequn Avic Trust Co., Ltd. DirectorJan, 2011 to the

presentNo

Sun ZequnWah Hin and Company

Private LimitedDirector

Apr, 2012 to the present

Yes

Sun ZequnSPH REIT Management

Pte LtdDirector

June, 2013 to the present

Yes

Chen YongmingShanghai Lijia Plate

Making and Printing Co., Ltd

DirectorFrom March, 1995

to the presentNo

Chen Yongming OCBC Management

Services Privte LimitedManager

From January, 2005 to the present

Yes

Chen Yongming Eastern Holdings Limited DirectorFrom September,

2009 to the presentNo

Chen YongmingOCBC Capital Investment

(Asia) LimitedDirector

From September, 2009 to the present

No

Chen YongmingBathurst Enterprises

Limited Director


No

Chen Yongming Select Securities Limited DirectorFrom September,


Chen YongmingOCBC Nominees (Hong

Kong) Limited Director


No

Chen Yongming OCBC Advisors Limited DirectorFrom September,


Chen YongmingOCBC Securities (HK)

LimitedDirector


No

Chen YongmingOversea-Chinese Banking (China)

Corporation Ltd.Supervisor

From October 2010 to the present

No

Song HanpingBayi Fubon (Ningbo)

Basketball Club Co., LtdChairman of

the BoardFrom December




123

Chen GuanghuaShanshan Holdings

LimitedExecutive

DirectorFrom January 2015

to the presentYes

Chen Guanghua Shanshan Group Co., LtdExecutive Vice

PresidentFrom January 2013

to the presentYes

Xv LixunNingbo Huamao Cultural and Educational Holdings

Co., Ltd.

Chairman of the board

From Jan 2011 to the present

No

Xv LixunZhejiang Huamao Real

Estate Development Co., Ltd.

DirectorFrom Feb 2002 to

the presentNo

Xv LixunNingbo Huamao

Educational and Cultural Investment Co., Ltd.

SupervisorFrom June 2010 to

the presentNo

Xv Lixun

Beijing Qisehua Educational and

Scientific Development Co., Ltd.


From Nov 2011 to the present

No

Xv LixunZhejiang Huamao

International Trade Co., Ltd.


From Sep 2005 to the present

No

Xv LixunNingbo Maoxuan

International Trade Co., Ltd.


From July 2008 to the present

No

Xv LixunNingbo Huamao

Education GroupDirector

From Oct. 2004 to the present

No

Xv LixunNingbo Huamao Foreign

Languages SchoolDirector

From July 1998 to the present

No

Xv LixunZhejiang Quzhou Huamao Foreign

languages School


From Nov 1999 to the present

No

Xv LixunZhejiang Longyou Huamao Foreign

languages School


From Aug 2011 to the present

No

Xv LixunNingbo Yuandian

Cultural Development Co., Ltd.

Executive director

From Jan 2008 to the present

No



Term of Office




2014 ANNUAL REPORT

124



Term of Office



Xv LixunNingbo Huamao Multi-

culture Educational Center


From Feb 2006 to the present

No

Xv LixunZhejiang Huamao Power

Technical Co., Ltd.Executive

directorFrom July 2011 to

the presentNo

Li HanqiongYoungor Investment Co.,

Ltd.General manger

From April, 2007 to the present

No

Li HanqiongYoungor Clothing Holding Co., Ltd.

DirectorFrom January, 2015

to the presentNo

Zhu JiandiLixin Certified Public

Accountants Co., Ltd. (special general partner)

Director accountant,

chairman, chief partner

From January, 2011 to the present

Yes

Fu JijunChinese Financial

Consulting Co., Ltd.Chairman


Yes

Fu JijunFulue Modern Consulting

(Beijing) Co., Ltd.Chairman

From October, 2004 to the present

No

Fu JijunWeiyi Huichuang Data

Technology (Beijing) Co., Ltd.

ChairmanFrom October, 2013

to the presentNo

Fu JijunYuanhua Film Investment

(Beijing) Co., Ltd.Chairman


No

Ben Shenglin Tsingtao Beer Co., Ltd.Independent

directorFrom June, 2014 to

the presentYes

Ben ShenglinSchool of Management

of Zhejiang University

Professor, doctoral

supervisor, EMBA central

director


Yes

Pu YiweiAssets Management Company of Ningbo

UniversitySupevisor


No



125

III. Remuneration of Directors, Supervisors and Senior Management Personnel

(I). Decision-making Process and Determination Basis for the Remuneration of Directors,

Supervisors and Senior Manager

Decision-making process for the remuneration of directors, supervisors and senior management personnel

Remuneration of Chairman of the Board and Chief Supervisor of Bank of Ningbo Co., Ltd, Allowance of Directors and Supervisors of Bank of Ningbo Co., Ltd and Remuneration of Senior Management Personnel of Bank of Ningbo Co., Ltd are drawn up by Remuneration Committee of the Board of Directors. Among of which, Remuneration of Chairman of the Board and Chief Supervisor of Bank of Ningbo Co., Ltd and Allowance of Directors and Supervisors of Bank of Ningbo Co., Ltd will be submitted to the general meeting of shareholders for approval after being consented by Board of Directors; and Remuneration of Senior Management Personnel of Bank of Ningbo Co., Ltd will be examined and approved by Board of Directors.

Determination basis for the remuneration of directors, supervisors and senior management personnel

The annual remuneration of Chairman of the Board, Vice Chairman, Chief Supervisor and Senior Management Personnel will be determined in accordance with Remuneration of Chairman of the Board and Chief Supervisor of Bank of Ningbo Co., Ltd, Remuneration of Senior Management Personnel of Bank of Ningbo Co., Ltd and their results of appraisal; remuneration of other directors and supervisors will be determined in accordance with Allowance of Directors and Supervisors of Bank of Ningbo Co., Ltd.

Actual payment of the remuneration of directors, supervisors and senior management personnel

The basic wages of Chairman of the Board, Vice Chairman, Chief Supervisor and Senior Management Personnel will be paid in accordance with the salary management system, and their performance pay will be determined in accordance with the annual performance evaluation; remuneration of other directors and supervisors will be paid monthly in accordance with their allowance standard.


2014 ANNUAL REPORT

126

Unit: (RMB) Ten thousand

(II). Remuneration of Directors, Supervisors and Senior Manager during the Reporting

Period

Name Position Gender Age Tenure Status

Total Remuneration Received from the Company

Total Remuneration

Received from the

Shareholders

Actual remuneration at the end of the reporting

period

Lu HuayuDirector and Chairman of

the BoardMale 50

Currently occupied

250.00 0 250.00

Luo Mengbo

Director, vice chairman, president

Male 44Currently occupied

237.50 0 237.50

Yu Fengying

Director, vice chairman

Female 56Currently occupied

225.00 0 225.00

Hong Lifeng

Director, vice president


212.50 0 212.50

Shi Lizhong

Director Male 59 Resigned 5.84 Note 1 5.84

Dai Zhiyong

Director Male 43 Resigned 0.84 Note 1 0.84

Yu Weiye Director Male 51Currently occupied

5 Note 1 5

Sun Zequn

Director Male 63Currently occupied

5.84 0 5.84

Chen Yongming


5.84 0 5.84

Song Hanping


5.84 200 205.84

Li Rucheng


0.84 366.62 367.46

Chen Guanghua


5.84 1.19 7.03

Xv Lixun Director Male 40Currently occupied

5.84 100 105.84

Li Hanqiong

Director Female 37Currently occupied

5 320.94 325.94

Cai LaixingIndependent

directorMale 72 Resigned 0 0 0



127

Xie Qingjian

Independent director

Male 70 Resigned 0 0 0

Tang Sining



0 0 0

Li YunqiIndependent

directorMale 63 Resigned 0 0 0

Zhu JiandiIndependent

directorMale 49

Currently occupied

0 0 0

Yang Xiaping



0 0 0

Fu JianhuaIndependent

directorMale 63

Currently occupied

0 0 0

Fu JijunIndependent

directorMale 57

Currently occupied

0 0 0

Ben Shenglin



0 0 0

Zhang Hui

Staff representative

supervisor, supervising

chairman


225.00 0 225.00

Xv Liming Supervisor Male 52Currently occupied

4.92 30 34.92

Chen Zhongjing

Supervisor Male 52 Resigned 0.42 37.41 37.83

Liu SuyingExternal

supervisorFemale 69

Currently occupied

0 0 0

Zhang Yingfang

External supervisor


20.55 0 20.55

Pu YiweiExternal

supervisorFemale 44

Currently occupied

18.75 0 18.75

Shen Dong


supervisorMale 34 Resigned 180 0 180

Yu Ningning


supervisorMale 38

Currently occupied

115 0 115



Total Remuneration

Received from the

Shareholders


period


2014 ANNUAL REPORT

128

Note: 1. Remuneration of directors from the shareholders is still in confirmation

2. Remuneration of Khoo Seow Chiong is paid by OCBC Advisor Limited.

3. Performance annual salary of senior manager undergoes deferred payment; as specified within the sheet, 2014 deferred remuneration of senior management in 2014 is 6.0412 million yuan, not transferred to person temporarily.

4. Deferred remuneration for the senior management of the Company in 2011 is 4.6114 million yuan, including 0.7556 million yuan for Lu Huayu as chairman, 0.5 million yuan for Luo Mengbo as president, 0.7289 yuan for Yu Fengying as vice chairman, 0.6906 million yuan for Zhanghui as supervising chairman, 0.6281 million yuan for Hong Lifeng as vice president, 0.6281 million yuan for Luo Weikai as vice president, 0.3701 million yuan for Fu Wensheng as vice president and 0.27 million yuan for Wang Yongjie as vice president.

(III). Equity Incentive Awarded of the Company's Directors, Supervisors and Senior Manager

during the Reporting Period

Company Directors, Supervisors and Senior Management Personnel have not been awarded any

equity incentive during the reporting period.



Total Remuneration

Received from the

Shareholders


period

Liu RufenStaff

representative supervisor


100 0 100

Luo Weikai

Vice president,

finance employee in

charge


212.50 0 212.50

Khoo Seow Chiong

Vice president Male 53 Resigned 0 0 0

Fu Wensheng

Vice president Male 42Currently occupied

212.50 0 212.50

Wang Yongjie

Vice president Male 42Currently occupied

212.50 0 212.50

Yang Chen

Board secretary


175.00 0 175.00



129

IV. Personnel Alternation of the Company's Directors, Supervisors and Senior

Manager

Name Position Type Date Reason

Dai Zhiyong Director Resigned on expiry February 9, 2014

Yu Weiye Director ElectedFebruary 10,

2014

Li Rucheng Director Resigned on expiry February 9, 2014

Li Hanqiong Director ElectedFebruary 10,

2014

Shi Lizhong Director Resigned April 8, 2015 For work

Cai LaixingIndependent

directorResigned

September 10, 2014

Personal reasons

Xie QingjianIndependent

directorResigned

September 10, 2014

Personal reasons

Li YunqiIndependent

directorResigned

September 10, 2014

Personal reasons

Fu JianhuaIndependent

directorElected

September 11, 2014

Fu JijunIndependent

directorElected

September 11, 2014

Ben ShenglinIndependent

directorElected

September 11, 2014

Shen Dong Supervisor Resigned on expiry February 9, 2014

Chen Zhongjing Supervisor Resigned on expiry February 9, 2014

Note: 1. In January, 2014, the Company appointed Zhang Hui, Yu Ningning and Liu Rufen as employee supervisors of the 5th board of supervisors of the Company through employee democratic election, each term shall be 3 years, equal to that of shareholder supervisors and external supervisors of the 5th board of supervisors; on the expiry of the term, Shen Dong is resigned from his post as employee supervisor of the Company.

2. The Company convened 2014 first extraordinary general meeting on February 10, 2014, elected Lu Huayu, Meng Luobo, Yu Fengying, Shi Lizhong, Yu Weiye, Sun Zequn, Chen Yongming, Song Hanping, Chen Guanghua, Hong Lifeng, Xv Lixun and Li hanqiong as the directors of the 5th board of directors, elected Cai Laixing, Xie Qingjian, Tang Sining, Li Yunqi, Zhu Jiandi and Yang Xiaoping as independent directors of the 5th board of directors, elected Xv Liming as the supervisor of the 5th board of directors, and elected Zhang Yingfang, Liu Suying and Pu Yiwei as external supervisors of the 5th board of directors. On the expiry of the term, Dai Zhiyong and Li Rucheng are resigned from their posts as directors of the Company, and Chen Zhongjing is resigned from his post as supervisor of the Company.

3. The Company convened the first meeting of the 5th board of directors on February 10, 2014, elected Lu Huayu as chairman of the 5th board of directors, elected Luo Mengbo and Yu Fengying as vice chairmen of the 5th board of directors, appointed Luo Mengbo as president of the Company, appointed Hong Lifeng, Luo Weikai, Fu Wensheng and Wang Yongjie as vice presidents of the Company, appointed


2014 ANNUAL REPORT

130

Luo Weikai as person in charge of finance of the Company, and appointed Yang Cheng as secretary of the 5th board of directors of the Company. On the expiry of the term, Khoo Seow Chiong is resigned from his post as vice president of the Company.

4. Mr. Cai Laixing, Mr. Xie Qingjian and Mr. Li Yunqi, former independent directors of the Company, were resigned from their posts as independent directors on June 9, 2014 due to personal reasons. To meet the requirement that the number of the independent directors is at least 1/3 of the members of the board of directors, new independent director shall be elected through stockholders' meeting since the independent directors were resigned, and the qualification of the independent director shall become effective with approval of supervisory authority of China Banking Industry. On September 11, 2014, the Company convened 2014 fourth extraordinary general meeting, elected Mr. Fu Jianhua, Mr. Fu Jijun and Mr. Ben Shenglin as independent directors of the 5th board of directors, and their qualifications shall be approved by supervisory authority.

5. Mr. Shi Lizhong, former director of the Company, was resigned from his post as director on April 8, 2015 due to personal reasons.

V. Changes on the Core Technical Team or Key Technical Staff during the

Reporting Period (non-directors, supervisors and senior manager )

There is no change in the core technical team or key technical staff in the Company during the

reporting period.

VI. Employees in the Company

Up to Dec.31, 2014, there are 7498 employees in the Company, amongst which, 2466 are

corporate banking staffs, 1180 are personal banking staffs, 2094 are financial capital and operation

management staffs, 555 are risk and compliance management staffs, 281 are information

technology staffs, 302 are managerial staffs, 101 are other financial business staffs and 519

are other administration staffs. Among the employees, employees with bachelor degree or above

account for 91.31%, employees with college degree account for 7.36%, and employees with

technical secondary education and below account for 1.33%.

Personal banking16%

Other financial business 1%

Information technology 4%

Management personne l4%

Risk and compliance management 7% Financial capital

and operation management

28%Corporate

banking 33%

Others7%

numbers of employees in each specialty

educational background of employees

College degree 8％

Technical secondary education and below 1％

Bachelor degree or above 91％



131

Chapter Ten Corporate Governance

I. Basic Conditions of the Company Governance

During the reporting period, the Company enhancedits governance mechanism, established and

improved its internal control system and further improved the level of corporate governance in

strict compliance with the requirements of Company Law, Securities Act, Governance Guidelines

for Listed Companies, Listing Rules of Shenzhen Stock Exchange and Standardized Operation

Guidelines for Small and Medium-sized Enterprise Board Listing Companies of Shenzhen

Stock Exchange. Up to Dec.31, 2014, the the actual situation of the corporate governance are

consistant with the requirements of related documents，and did not receive any documents about

administrative supervision measures that required for rectification within a specified time from

regulatory authorities. Main systems performed upon the examination and approval of the general

meeting of shareholders or Board of Directors after the listing of the Company are as follows:

Systems that have been established by the Company Latest disclosure time

Independent Directors Annual Report Working System April 23, 2008

Management Measures for the Prevention of Application of Funds of Large Shareholders and Related Parties

July 22, 2008

Fund-raising Management System December 30, 2009

Annual Report Working Procedures of Audit Committee of the Board of Directors (revised)

February 26, 2010

Annual Report Information Disclosure System of Accountability for Serious Mistakes

February 26, 2010

External Information Users Management System February 26, 2010

Insider Information and Insiders Registration and Management System (revised)

November 25, 2011

Independent director working system December 14, 2012

Stock right pledge management method August 21, 2014

Consolidated management method August 21, 2014

Articles of Association (revised) November 11, 2014

Information Disclosure Management System (revised) February 2, 2015

I. Shareholders and general meeting of shareholders. The Company held general meetings

of shareholders in strict compliance with the requirements of Articles of Association and Rules

of Procedures of the General Meeting of Shareholders to ensure fair treatment towards all

shareholders and enable them to fully excise shareholders' rights.

2014 ANNUAL REPORT

132

Chapter Ten Corporate Governance（continued）

II. Shareholders and the Company. The company has no actual controlling shareholder, and the

Company is completely independent from shareholders holding more than 5% shares in terms of

personnel, assets, finance, institution and business. The Board of Directors, Board of Supervisors

and other internal offices of the Company operate in an independent manner.

III. Directors and Board of Directors. the board of directors comprised 15 directors at the

end of the reporting period, including 6 independent directors. Independent directors are

assumed by professionals in the field of finance and law etc, which assure the quality and level

of decision-making of the Board of Directors, safeguard the rights and interests of the Company

and all shareholders and give full play to the central role of the Board of Directors in corporate

governance. In compliance with the requirements of the relevant provisions, the Board of Directors

of the Company consists of six special committees: Strategic Committee, Audit Committee, Related

Party Transaction Control Committee, Risk Management Committee, Nomination Committee and

Remuneration Committee. There is a clear division of labor, rights and responsibilities between each

committee to ensure the effective operation of all committees.

IV. Supervisors and Board of Supervisors. 7 supercisors comprise the Board of Supervisors

by the end of the reporting period, including 3 employee supervisors, 3 external supervisors and

1 supervisor of shareholder. The structure of the Board of Supervisors followsthe requirements

of laws and regulations. The Board of Supervisors consists of Audit Committee and Nomination

Committee. The supervisors of the Company can fulfill their duties earnestly，and supervise

the legality and compliance of Company's financial personnel, directors and senior management

personnel during the performance of their responsibilities in line with the spirit of being responsible

to the shareholders.

V. Operation and decision-making system. The outmost authority of the Company is general

meeting of shareholders, which carries out decision-making, management and supervision by the

Board of Directors and Board of Supervisors. During the reporting period, the senior management

of the Company is composed of one president of the Bank, four vice presidents of the Bank and

one secretary of the Board of Directors. The president is appointed by the Board of Directors,

to be fully responsible for the daily operation and management of the Company. The Company

implements the first-grade legal entity management system, and the branch does not have a legal

personality. The branches shall conduct business in accordance with the law, and the civil liability of

which is borne by the head office.

VI. Information disclosure and transparency. The company establishes a perfect information

disclosure system and relevant systems have been revised according to the actual situation; the


133


Company can disclose relevant information in a faithful, accurate, complete and timely manner and

ensure that all shareholders have equal access to information in strict accordance with the laws,

regulations, Articles of Association and provisions of Company's Information Disclosure System.

The Company set up Annual Report Information Disclosure System of Accountability for Serious

Mistakes and Annual Report Working Procedures of Audit Committee of the Board of Directors,

which made a clear definition of confirmation of responsibility, responsibility investigation and form

of responsibility investigation of disclosure mistakes in annual report information, and the rights and

responsibilities of the Audit Committee during the preparation and disclosure of the annual report.

The above systems play a standardization role in strengthening the authenticity, accuracy,

completeness and timeliness of information disclosure in the Company, reinforcing the

accountability efforts of the persons responsible for the information disclosure of the annual report

and improving the quality and transparency of information disclosure of the annual report.

VII. Formulation and Implementation of Information Insiders Registration and Management

System. The Company strictly implements the revised Inside Information and Insiders Registration

and Management System of Bank of Ningbo Co., Ltd, pays great attention to the management

of insider information, strictly controls the scope of information insiders, and registers the list of

persons who know the Bank's insider information in a timely manner. Based on these measures, the

Company conducts special training and case study for relevant departments and employees for

the prevention and control of to prevent insider trading, organizes relevant personnel to attend

various trainings such as insider trading warning education exhibition held by securities regulatory

authorities, and organizes a self-examination timely on trading of company stock by internal

information insiders. During the reporting period, the Company has not found any information

insider to illegally use insider information for the trading of company stocks, or any director,

supervisor and senior management personnel who are involved in the illegal trading of company

stocks. Furthermore, no regulatory measures and administrative penalty are taken against it by the

regulatory authorities because of violation of insider information and insider management system or

suspicion of insider trading.

2014 ANNUAL REPORT

134


II. Relevant Information about the Annual General Meeting of Shareholders and

Extraordinary General Meeting Convened during the Reporting Period

(I). Information about the Annual General Meeting of Shareholders Convened during the

Reporting Period

Meeting Date Name of the Proposal ResolutionDisclosure

DateDisclosure

Index

Annual General Meeting of Shareholders of 2013

May 16, 2014

1 Annual report on the work of the Board of Directors of Bank of Ningbo Co., Ltd in 2013; 2 Proposal on Annual Report of Bank of Ningbo Co., Ltd in 2013; 3 Annual Financial Report of Bank of Ningbo Co., Ltd in 2013 and Annual Financial Budget Plan in 2014; 4 Report on Annual Profit Distribution Plan of Bank of Ningbo Co., Ltd in 2013; 5 Report on Insiders and Shareholders Related Transactions in 2013 and Arrangements in 2014 of Bank of Ningbo Co., Ltd; 6 Proposal on the Expected Amount of Daily Related Party Transactions of Bank of Ningbo Co., Ltd in 2014; 7 Proposal on the Employment of External Audit Agency; 8 Proposal on the Implementation of Liability Insurance on Directors, Supervisors and Senior Management; 9 Method for Allowance of Directors of Bank of Ningbo Co., Ltd.; 10 Method for Allowance of Supervisors of Bank of Ningbo Co., Ltd.; 11 Method for Remuneration of Chairman and Vice Chairman of Bank of Ningbo Co., Ltd.; 12 Method for Remuneration of Supervising Chairman of Bank of Ningbo Co., Ltd.; 13 Proposal on Establishment of Financial Leasing Company; 14 Report of Board of Supervisors of Bank of Ningbo Co., Ltd in 2013; 15 Work Summary of 2013 and Work Plan of 2014 of Board of Supervisors of Bank of Ningbo Co., Ltd; 16 Proposal on the Evaluation Report of Board of Supervisors and Performance of Supervisors of Bank of Ningbo Co., Ltd in 2013; 17 Proposal on the Evaluation Report of Board of Directors and Performance of Directors of Bank of Ningbo Co., Ltd in 2013; 18 To Hear the Comments of Board of Supervisors on the Annual Audit Report of the Company in 2013; 19 To Hear the Annual Duty Report of Independent Directors in 2013.

ApprovedMay 19,

2014

China Security

News, Shanghai Securities

News, Securities

Times, Securities Daily and

CNINF (http://

www.cninfo.com.cn)


135


(II). Information about the Extraordinary General Meeting Convened during the Reporting

Period


DateDisclosure

Index

First Extraordinary General Meeting of 2014

February 10, 2014

ApprovedFebruary 11,

2014

China Security


News, Securities


CNINF (http://www.cninfo.com.

cn)

1 Proposal on the general election of the board of directors of Bank of Ningbo Co., Ltd.; 2 Proposal on the general election of the board of supervisors of Bank of Ningbo Co., Ltd.; 3 Proposal on the selection of Shi Lizhong as the director of 5th board of directors of Bank of Ningbo Co., Ltd.; 4 Proposal on the selection of Yu Weiye as the director of 5th board of directors of Bank of Ningbo Co., Ltd.; 5 Proposal on the selection of Sun Zequn as the director of 5th board of directors of Bank of Ningbo Co., Ltd.; 6 Proposal on the selection of Chen Yongming as the director of 5th board of directors of Bank of Ningbo Co., Ltd.; 7 Proposal on the selection of Song Hanping as the director of 5th board of directors of Bank of Ningbo Co., Ltd.; 8 Proposal on the selection of Chen Guanghua as the director of 5th board of directors of Bank of Ningbo Co., Ltd.; 9 Proposal on the selection of Xv Lixun as the director of 5th board of directors of Bank of Ningbo Co., Ltd.; 10 Proposal on the selection of Li Hanqiong as the director of 5th board of directors of Bank of Ningbo Co., Ltd.; 11 Proposal on the selection of Lu Huayu as the director of 5th board of directors of Bank of Ningbo Co., Ltd.; 12 Proposal on the selection of Yu Fengying as the director of 5th board of directors of Bank of Ningbo Co., Ltd.; 13 Proposal on the selection of Luo Mengbo as the director of 5th board of directors of Bank of Ningbo Co., Ltd.; 14 Proposal on the selection of Hong Lifeng as the director of 5th board of directors of Bank of Ningbo Co., Ltd.; 15 Proposal on the selection of Cai Laixing as the director of 5th board of directors of Bank of Ningbo Co., Ltd.; 16 Proposal on the selection of Xie Qingjian as the independent director of 5th board of directors of Bank of Ningbo Co., Ltd.; 17 Proposal on the selection of Tang Sining as the independent director of 5th board of directors of Bank of Ningbo Co., Ltd.; 18 Proposal on the selection of Li Yunqi as the independent director of 5th board of directors of Bank of Ningbo Co., Ltd.; 19 Proposal on the selection of Zhu Jiandi as the independent

2014 ANNUAL REPORT

136


director of 5th board of directors of Bank of Ningbo Co., Ltd.; 20 Proposal on the selection of Yang Xiaoping as the independent director of 5th board of directors of Bank of Ningbo Co., Ltd.; 21 Proposal on the selection of Xv Liming as the supervisor of 5th board of directors of Bank of Ningbo Co., Ltd.; 22 Proposal on the selection of Zhang Yingfang as the external supervisor of 5th board of directors of Bank of Ningbo Co., Ltd.; 23 Proposal on the selection of Liu Suying as the external supervisor of 5th board of directors of Bank of Ningbo Co., Ltd.; 24 Proposal on the selection of Pu Yiwei as the external supervisor of 5th board of directors of Bank of Ningbo Co., Ltd.; 25 Proposal on private issuance share condition of Bank of Ningbo Co., Ltd.; 26 Proposal on private-issued share program; 27 Proposal on reporting of the use of previous raised funds; 28 Proposal on feasibility report of the use of private-issued share raised funds; 29 Proposal on requiring the general meeting of stockholders to authorize the board of directors and requiring the board of directors to authorize the chairman to handle related matters of this private-issued shares; 30 Proposal on medium- and long-term capital plan of Bank of Ningbo Co., Ltd.; 31 Proposal on shareholder return plan in next three years of Bank of Ningbo Co., Ltd.; 32 Proposal on revising the articles of Bank of Ningbo Co., Ltd.; 33 Proposal on revising procedure rules of the general meeting of stockholders of Bank of Ningbo Co., Ltd.; 34 Proposal on revising procedure rules of the meeting of the board of directors of Bank of Ningbo Co., Ltd.; 35 Proposal on revising procedure rules of the meeting of the board of supervisors of Bank of Ningbo Co., Ltd.


DateDisclosure

Index


137


Second extraordinary general meeting of 2014

July 31, 2014

Proposal on adjust ing val idity period of resolution of shareholders' meeting of private-issued shares of Bank of Ningbo Co., Ltd.

ApprovedAugust 1,

2014

China Security


News, Securities



cn)

Third extraordinary general meeting of 2014

September 11, 2014

1 Proposal on issuing financial bonds; 2 Proposal on conducing credit asset security business of Bank of Ningbo Co. , Ltd. ; 3 Proposal on the selection of Fu Jianhua as the independent director of 5th board of directors of Bank of Ningbo Co., Ltd.; 4 Proposal on the selection of Fu Jijun as the independent director of 5th board of directors of Bank of Ningbo Co., Ltd.; 5 Proposal on the selection of Ben Shenglin as the independent director of 5th board of directors of Bank of Ningbo Co., Ltd.

ApprovedSeptember

12, 2014

China Security


News, Securities



cn)

Fourth extraordinary general meeting of 2014

November 11, 2014

1 Proposal on condition of private issuance of preferred shares of Bank of Ningbo Co., Ltd.; 2 Proposal on private issuance of preferred share program of Bank of Ningbo Co., Ltd.; 3 Proposal on requiring the stockholders' meeting to authorize the board of directors, chairman and/or person authorized by the chairman to enjoy full power of handling related matters of this private issuance of preferred shares; 4 Proposal on diluted return on demand and filling measures of private issuance of preferred shares; 5 Proposal on revising the articles of Bank of Ningbo Co., Ltd.; 6 Proposal on revising procedure rules of the meeting of the board of directors of Bank of Ningbo Co., Ltd.; 7 Proposal on revising procedure rules of the meeting of the board of supervisors of Bank of Ningbo Co., Ltd.; 8 Proposal on issuing level-II capital bonds of Bank of Ningbo Co., Ltd.

ApprovedNovember 12, 2014

China Security


News, Securities



cn)


DateDisclosure

Index

2014 ANNUAL REPORT

138


III. Performance of Independent Directors during the Reporting Period

(I). Information about Independent Directors Attending the Board of Directors and General

Meeting of Shareholders

Information about Independent Directors Attending the Board of Directors

Name of Independent Directors

Required Times of Attendance

of the Board of Directors during

the Reporting Period

Times of Attendance

in Person

Times of Attendance

by Means of Communication

Times of Attendance

by Proxy

Times of Absence

Whether they did not

attend the meeting in

person twice in succession

Cai Laixing 6 4 2 0 0 No

Xie Qingjian 6 4 2 0 0 No

Tang Sining 8 5 3 0 0 No

Li Yunqi 6 4 2 0 0 No

Zhu Jiandi 8 4 2 2 0 No

Yang Xiaoping 8 4 3 1 0 No

Fu Jianhua 2 1 1 0 0 No

Fu Jijun 2 1 1 0 0 No

Ben Shenglin 2 1 1 0 0 No

Times of Independent Directors attending the general meeting of shareholders

1

(II). Objections Raised by Independent Directors on Relevant Issues of the Company

No objection is raised by independent directors on relevant issues of the Company during the

reporting period.

(III). Other Information on the Performance of Independent Directors

During the reporting period, the independent directors of the Company performed their duties as

independent directors faithfully, continued proactive roles in the the Board of Directors, general

meeting of shareholders and relevant committee meeting, deepened the field investigation of the

Company to better understand the operation, internal control mechanism and implementation

of resolutions of the Board of Directors and gave independent opinions on the employment of

Company's senior management, external guaranty, occupation of capital by related parties, internal

control, annual profit distribution plan and further employment of audit agency etc to safeguard

the shareholders' interest especially the public shareholder' interest in strict accordance with laws


139


and regulations such as Company Law, Securitas Act, Guidelines for Conduct of Directors in Small

and Medium-sized Enterprise Board Listing Companies and relevant requirements of Articles of

Association and Working System of Independent Directors and in line with the attitude of being

responsible to the Company and investors. During the reporting period, independent directors of

the Company proposed independent opinions on the following 16 relevant issues approved by the

Board of Directors in succession, and put forward comments and suggestions during the meetings

and Company research, all these have been adopted or responded by the Company.

Disclosure time Issues Comment

January 14, 2014Independent opinion on the general selection of the board

of directorsAgree

January 14, 2014Advanced recognition on relevant transaction matters

invovled in private share of the Company in 2014Agree

January 14, 2014Independent opinion on relevant transaction matters

invovled in private share of the Company in 2014Agree

January 14, 2014Independent opinion on Shareholder Return Plan of Ningbo

Bank Co., Ltd. in Future Three years (2014-2016)Agree

February 12, 2014 Independent opinion on appointing senior management Agree

April 26, 2014Independent opinion on 2013 profit allocation plan of the

CompanyAgree

April 26, 2014

Special explanation and independent opinion on foreign guarantee of the Company as well as on capital occupation

of holding shareholders and other relevant parties of the Company

Agree

April 26, 2014 Independent opinion on appointing accounting firm Agree

April 26, 2014Independent opinion 2014 daily relevant transaction

predicted limit of the CompanyAgree

April 26, 2014Independent opinion on internal control self-assessment

report of the CompanyAgree

April 26, 2014Independent opinion on remuneration of directors,

supervisors and senior management of the CompanyAgree

April 26, 2014Independent opinion on derivative transaction businesses

and risk control situations of the CompanyAgree

July 16, 2014Independent opinion on adjusting validity peeriod of

private-issued share shareholders' meeting resolution of the Company

Agree

2014 ANNUAL REPORT

140


August 25, 2014

Special explanation and independent opinion on foreign guarantee of the Company as well as on capital occupation

of holding shareholders and other relevant parties of the Company

Agree

August 25, 2014Independent opinion on nominating Fu Jianhua, Fu Jijun

and Ben Shenglin as candidates of independent directorsAgree

October 22, 2014Special opinion on private issuance of preferred shares of

the CompanyAgree

Disclosure time Issues Comment

IV. Performance of Special Committees under the Board of Directors during the

Reporting Period

The Board of Directors of the Company consists of six special committees: Strategic Committee,

Audit Committee, Related Party Transaction Control Committee, Risk Management Committee,

Nomination Committee and Remuneration Committee. There is a clear division of labor, rights and

responsibilities between each committee to ensure the effective operation of all committees. 17

meetings were convened by all special committees in 2014, of which, Strategic Committee held 3

meetings, Audit Committee 5 meetings, Related Party Transaction Control Committee 2 meetings,

Risk Management Committee 3 meetings, Nomination Committee 3 meetings and Remuneration

Committee 1 meeting. All the special committees of the Board of Directors convened meetings and

performed their duties in strict accordance with Articles of Association, Rules of Procedures of the

Board of Directors and Working Rules of each special committee, operated in compliance with laws

and regulations, and proposed comments and suggestions on the Company's major development

strategy, financial report and internal audit and control, compliance management, related party

transactions management, risk management and control, nomination of directors and senior

management personnel, remuneration and appraisal etc respectively.

V. Work of the Board of Supervisors

No risk was found in the Company by the supervisory activity of the Board of Supervisors during

the reporting period, and the Board of Supervisors had no objection to the supervisory matters

during the reporting period.

VI. The complete independence between the Company and shareholders holding

more than 5% shares in terms of business, personnel, assets, institution and

finance and etc.

No controlinling shareholder exiests in the Company during the reporting period.


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(I). Business: the Company's business is independent from shareholders holding more than 5%

shares. The Company is independent in management and the business structure.

(II). Personnel: the Company is independent in terms of personnel and remuneration management.

(III). Assets: the Company has its independent place of business and supporting facilities.

(IV). Institution: the Company has established a sound organizational framework, the Board

of Directors, the Board of Supervisors and functional departments of the Company operate

independently with clearly defined functions. No subordinate relationship exists between the

Company and shareholders unit holding more than 5% shares.

(V). Finance: the Company has set up an independent financial department and audit department

with specialized financial officers and auditors, and established an independent accounting system

and financial management system.

VII. Horizontal Competition

No controlling shareholder exists in the Company, thus, no horizontal competition exist among

controlling shareholder, actual controller and other enterprises controlled by the actual controller.

VIII. Evaluation and Incentive of Senior Management Personnel

The senior management personnel are directly responsible for the Board of Directors of the

Company, appraised，rewarded or punished by the Board of Directors. The Incentive-restriction

Mechanism of the Company is mainly reflected by the income distribution of the senior

management personnel, the distribution policy and mechanism are decided by the Board of

Directors. The remuneration of the Company's senior management personnel is approved and

paid in accordance with Remuneration of Senior Management Personnel of Bank of Ningbo Co.,

Ltd. and publicly disclosed according to the relevant provisions. During the reporting period, the

Company would evaluate the annual performance of the senior management staff in accordance

with Performance Evaluation of Senior Management and Senior Management Personnel and

requirements of the relevant regulatory authorities. that the evaluation proves that the senior

management of the Company has accomplished the objectives assigned by the Board of Directors

and created a satisfactory performance for shareholders in 2014.

2014 ANNUAL REPORT

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Chapter Eleven Internal Control

I. Construction situation of internal control

(I) Internal control environment

1. Control environment. The company establishes the governance and organization structure

composed of general meeting of stockholders, board of directors, board of supervisors and senior

managements, and each governance subjectfulfills its corresponding following responsibility

rules and normative procedures. The general meeting of stockholders is the company's outmost

authority, the board of directors is decision-making organ and the board of supervisors is

supervision organ. Six special committees, including strategy, related transaction control, risk

management, audit, remuneration and nomination, are set under the board of directors as the

decision research institutes of the board of directors. The senior managements, in accordance with

the decision of the board of directors, are responsible for commanding, coordinating, managing and

supervising daily business activities of the whole company.

2. Organization structure. According to the internal control requirements, each functional

department of the Head Office as a whole is divided into three categories, business marketing

department, risk control department and operation & support department; the internal departments

of branches into business marketing department, risk control department and comprehensive

management department. In addition, the business division and responsibilities of each functional

department in the Head Office and branches are clearly specified.

In 2014, the company continues to optimize the organization structure, and consolidate the

management foundation. Firstly, further improve the two-level framework of departments in the

Head Office, and set new sales management department in credit card center; new portfolio

management department in risk management department; new anti-money laundering department

in corresponding department; new business processing center in operation department. And the

departments of audit, science & technology and administration adjust their two-level departments

respectively as well, continusly reinforcing the ability to support the business of each department.

Secondly, during the period of consummating the two-level structure, numerous departments of

which are further refined into three-stage in the light of professional division, promoting the delicacy

management level. Thirdly, transfer operational risk management function from risk management

department to compliance department in the Head Office and branches, and integrate the functions

of internal control and operational risk management, effectively reinforcing the management.

3. Internal control culture. The board of director and senior management of the Company, to

promote staff compliance assessment, emphasizing internal control training and learning, enhancing

the construction of prevention five mechanisms and the like, emphasize the importance of

internal control, so that all employees of the Company better understand the importance master


143

Chapter Eleven Internal Control（continued）

responsibilities and requirements of posts and jobs, understand and master the points of internal

control and actively participate in the internal control; therefore, a good internal control environment

is formed in the Company, the compliance concepts of "talent compliance, full-process compliance,

active compliance, compliance creating value" are further advocated, and the enterprise culture

of"compliance and efficiency" is created.

4. Human resource management. The company has formulated and reinforced human resource

policy, conducive to sustainable development of the company, and founded human resource

management system consisting of position system, remuneration system, performance

management system and training system, ensuring the healthy development of the company.

5. Staff's professional ethics. The Company can urge the staff to conscientiously obey

professional ethics from two aspects, namely enhancing other external inspection and encouraging

self inspection, and to discover problems of violating laws and rules from multiple channels. All

problems violating laws and rules discovered from internal and external inspection can be reflected

through 5198 complaint mailbox, president room mailbox and other channels, and the cost of

violating laws and rules is enhanced through such ways as compliance integration, economic

punishment and combined discipline punishment; meanwhile, the Company adheres to the principle

of lighter punishment or punishment remission forself inspection to encourage tstaff to conduct

self inspection, and to promote the legality and compliance of business operation.

(II) Risk identification and assessment

The company's board of directors, senior managements and relevant managers well realize the

credit risk, market risk, liquidity risk, operational risk, legal risk, reputation risk and other risks in the

process of operation and management. Through years of effort , the company has preliminarily

established an appropriate risk management system.

Risk management covers credit risk, market risk, liquidity risk, compliance risk, legal risk and

reputational risk and etc. faced by the Bank, which shall be monitored continuously. Risk

management department, compliance department and the office take the lead in implementing risk

management in the Bank, among which, the office takes charge of reputation risk management;

the compliance department is responsible for the management of operational risk, compliance risk

and legal risk; the risk management department is in charge of other risk managements except for

reputation risk, operational risk, compliance risk and legal risk.

The above risk management measures are detailed in the forth part of Chapter Five, Report of

Board of Directors.

2014 ANNUAL REPORT

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(III) Major internal control measures

The company has established multiply relatively comprehensive, systematic and regulations and

institutional systems. The internal control policies and measures have covered all major risk points,

as well as the overall process of business operation and management activity, ensuring that there

are laws to abide by, regulations to comply with and documents to check, authentically forming

an effective mechanism, regulating behavior by system, handling affairs according to system and

managing employees through system.

1. Internal control system carding and evaluation. The Company attaches great importance

to system construction, optimizes the regulatory systems of the Company several times by

compliance system construction, standardized pilot of internal control and two-level internal

control system construction at the Head Office and branches, to guarantee that the system

shall authentically embody the needs of business operations and management activities, and the

company shall be consistent with laws & regulations and supervision requirements to ensure the

normalization of business operation and to eliminate sources of risk. In 2014, the company cards

3 types of internal control systems involving bill business, asset custody and credit management,

and evaluates the consistency of exterenal laws and rules, effectiveness of risk control measures,

operability of business standard, flow setting rationality and other aspects involving the system

after implementation.

2. Internal control of department/post separation; the Company is reasonable and clear in

assignment of responsibility among various departments and posts, realizes seperation of front-

ground marketing from middle-ground risk control and business operation of the whole bank, and

carries out centralized management policy on credit archives, financial accounting and counter

settlement and authorization of the whole bank; meanwhile, follow necessary separation principle on

key and special posts, separate credit business investigation post from audit and approval posts,

and separate credit business approval from accounting handling.

3. Internal control of shift and mandatory vacation. The Company, on the basis of adopting shift and

mandatory vacation management system for general managers of various departments of the head

office, presidents of various branches/branches in Ningbo as well as various high- and intermediate-

level managers and staffs in important posts involving operation, finance, credit management and

the like, further deepens the shift and mandatory vacation mechanism of the counter staff from the

aspects of optimizing shift way, enhancing cross-institution shift, etc.

4. Internal control of credit business. Firstly, the company has issued annual credit policy, requires

various regions to make regional credit rules in line with differences in such aspects as customer

situation, industry cluster characteristics and regional status of the industry, and to adjust timely


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depending on market change; secondly, perfect risk early warning, expand the external information

collection channel of the risk early warning system, and apply to front-loan access and duration

management by combining system access and artificial inquiry; thirdly, carry out risk examination

in key fields, resolve risks timely, and actually prevent possible adverse influence of large-amount

asset credit risk on the Company; fourthly, construc concentration risk management framework,

establish concentration risk measuring system and formulate risk limit management mechansim; and

fifthly, deepen credit business license management, define responsibilities of related departments ,

business error standard, and enhance award and punishment force on license integration.

5. Internal control of capital business. Firstly, in conformity to the development plan of capital

business and market conditions, adjust market risk limits timely, and update credit risk value

of financial derivative transaction on commission; Secondly, optimize customer information and

structure, guide the branches to deepen customer hierarchy, define business cooperation space;

Thirdly, establishcard interbank business governance system, including interbank business reform

leading group and special department for interbank business; incorporate the interbank business

into comprehensive risk management, establish and optimize internal control mechanisms from

front, to back-ground ends ; establish interbank business counterparty access mechanism, carry

out centralized and uniform list management system on the counterparty through the interbank

special department inthe head office, and periodically assess and adjust the system timely;

Fouthly, establish branch position forecasting system, so s to improve the accuracy of branch

position forecasting and fund arrangement for the whole bank, and to optimizethe financial liquidity

management.

6. Internal control of personal business. Firstly, further standardize agency insurance sales

business, put Yinbaotong system into system and strengthen management on seller's qualification

and behavior; secondly, internal control mechanism of sending customers' short messages,

guarantee uniform platform number, compliant short message content and reasonable sending

time, and introduce sending approval mechanism; thirdly, further standardize work outsourcing

issues, define job outsourcing mode and aera, and strengthen the management on outsourcing

units and outsourced personnel.

7. Internal control of financial management. Firstly, continue to improve the financial authorization

and approval system, define the approval levels of various institutions, standardize approval

procedures and improve the effectiveness of internal financial control. Secondly, standardize cost

management, strictly control large-amount expense, so as to , prevent staff fraud and realize

the optimized resource allocation; thirdly, in line with requirements on business development

and management, continue to perfect financial accounting method for various new products and

businesses, and enhancing accounting control; fourthly, deepen capital management, conduct

2014 ANNUAL REPORT

146


capital forecasting work, evaluate capital gap of the whole bank, meanwhile pay attention to the

change of capital adequacy ratio closely and complete economic capital evaluation; and fifthly,

promote interest rate management, revise various interest rate depending on trend of the market

and situation of the Company timely, and meanwhile, introduceinterest rate change information

sharing platform and promote the health development of the business.

8. Internal control of intermediary business. Firstly, according to the spirit of Management

Measurs for Service Price of Commercial Banks, car service charging item of the Company once

again, launch the service charging contents through such channels as official website and self-

service banking, and use new service charging material; secondly, revise related systems involving

intermediary business, further define pricing processand charging standard adjustment of the

intermediary business; thirdly, carry out special examination on service charging and enhance

training on various charging policies of new branches and new employees, to guarantee the

compliance of the business marketing and charging; fourthly, establish strict accounting system,

adjust timely keeping with business situation, and accurately account various intermediary

businesses.

9. Internal control of operation settlement; firstly, realize application and optimization of the

early stage warning system, enhance real-time monitoring and management, and establish "early

stagewarning map" including four dimensions, namely product, network, teller and business;

secondly, implement counter abnormal event reporting and deposal procedure, and report the

abnormal events depending on the classification of abnormal situations on the basis of principle of

being timely, effective, confidential and hierarchical disposal; thirdly, standardize accounting record

management, make clear accounting record competent department, and perfect accounting record

retrieval and destruction processes.

10. Internal control and information science and technology. Firstly, introduce emergency

management and disaster recovery construction, carry out the regular exercise of important

system, and meanwhile revise emergency plans for important information system and high-risk

system, so as to guarantee stable operation of the system; secondly, implement information

security management, carry out full-framework review and safety assessment before listing,

complete external system permeability test and safety system inspection & analysis, and meanwhile

guarantee the network operation safety of the Company; thirdly, continue to implement IT operation

& maintenance and event handling, classify various events, and handle well according to importance

and urgency regulation.

(IV) Information and communication

1. The company has founded a smooth internal communication mechanism; through a variety of


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communication channels of document system, OA office system, internal publications and etc., to

ensure important information delivered in time.

2. In terms of external information and communication, the company perfects improves the

information disclosure system according to the regulatory requirements, accurately and timely

discloses relevant information. By the means of timely publishing management and contact

information on CNINFO website and the company portal, to guarantee that investors will keep

abreast of the company's business dynamics, understand and trust the company through

interaction.

(V) Supervision and evaluation of internal control

1. The company establishes an independent and upright internal audit management system. The

board of directors is responsible for establishing, maintaining and completing effective internal

audit system, and is provided with an audit committee to be responsible for the board of directors;

the company's audit department is internal audit department of the company, which is responsible

for auditing operation management behaviors of the company and responsible for the board

of directors and audit committee of the board of directors. Based on the requirements of Trial

Measures for Internal Audit Performance Assessment of Bank of Ningbo Co., Ltd., the board of

supervisors assesses the annual performance of internal audit.

2. The internal audit, depending on the authority of the board of directors, independently performs

internal audit right away from interference of other departments or personals. The internal

audit department shall not participate in specific operation activity within duty scope of other

departments, to guarantee independence of the internal audit work. The company, depending on

regulation, allocates internal audit personals, and establishes internal post shift system.

(VI) Working plan of establishing and completing internal control system

1. Strengthen the internal control system management to ensure the compliance and effectiveness

of internal control system. Firstly, continue to implement dependence mapping mechanism of

internal and external systems, interpret important regulatory policies, summarize and extract

relevant compliance requirements, and timely revise and perfect internal control system; II. carry

out credit card business and post-evaluation of financial market business internal control system,

promote the standardization and perfectness of the internal control system for key businesses

of the Company, and realize the compliance, effectiveness and operability of the internal control

system; and thirdly, in accordance with business development and internal control management

of the Company, carry out internal system overall evaluation, card the internal control systems

corresponding to business and management activities, and detect leak and fill vacancy timely.

2014 ANNUAL REPORT

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2. Carry out overall risk management; firstly, strengthen the implementation force of full-process

risk management: establish execution evaluation system of full-process risk management by the

head office, carry out normal examination and counselling on the branches and further deepen full-

process risk management; secondly, develop roling role of credit policy: various branches expand

business in accordance with direction guided by the credit policy of the head office; the head

office shall maintain market sensitivity in the process of executing credit policy, promote progress

according to change in external environment and internal work, continously adjust and optimize

credit policy, and improve the integrating degree of credit policy and key business development of

the Company; and thirdly, give full development of role fo the early warning mechanism: implement

normal risk checking, carry out linkage of related system early warning information and discover

risks in multiple dimensions.

3. Deepen case and staff moral hazard prevention and control; firstly, deepen the implementation

of five mechanisms, improve working way and working method, and formulate prevention and

control work program in 2015; secondly, enhance the implementation of reinforce the operation of

reporting system, encourage the staff to report case risk information timely, continuously improve

working efficiencies of audit examination and operation monitoring, award the person reporting the

hidden risk timely and increase punishment to person failing to report the risk; thirdly, on the basis

of external force linkage prevention and control, require various institutions to enhance contact with

local public security organs, and establish a positive interaction mechanism.

4. Further talent training and carry out "three co-ordination" work; firstly, coordinate echelon

construction of line talents, plan growth path for line personnel, formulate hierarchical staff training

program, improve growth assessment for line staff and enhance the implementatioon of staff

training measures; secondly, coordinate line key focus group training, enhance the leadership

training of line president and head of function management department, focus on training of such

professional teams as product manager, set example for talent growth and explore typical case; and

thirdly, coordinate capacity building of line team, plan training base construction, determine efficient

team in line and implement copying work of efficient team.

II. Setting situation and work development situation of Company's audit

department

(I) Positioning and setting situation of Company's audit department

The company establishes an independent and upright internal audit management system. The board

of directors is responsible for establishing, maintaining and completing effective internal audit

mechnasim, with an audit committee to be responsible for the board of directors; the company's


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audit department is internal audit department of the company, which is responsible for auditing

operation management behaviors of the entire industry and the board of directors and audit

committee of the board of directors; the internal audit, depending on the authority of the board of

directors, independently performs internal audit right away from interference of other departments

or personnel. The internal audit department shall not participate in specific operation activity within

duty scope of other departments, to guarantee independence of the internal audit work. The

company, depending on regulation, allocates internal audit personnel, and establishes internal post

shift system. Company's board of supervisors makes annually performance evaluation on the work

of internal audit.

(II) 2014 internal audit work performance situation

1. Further improve the organizational structure and personnel allocation to, strengthen the audit

management of the branches; And guide the audit work of the branches by carrying out linkage

project between Head Office and branch linkage project, like organizing internal and external

training, and working in Head Office, ; moreover, promote the implementeation of audit monitoring

system, and increase off-site audit capability of audit department in the branches.

2. Strengthen employee moral hazard audit system to, and strictly control operational risk. Further

strengthen routine investigation system and reporting system to achieve three-level monitoring

mechanism among head office, branch and subbranch; strengthen risk identification and

assessment, card and determine key inspection area, key inspection staff and audit focus; nnovate

inspection methods, and carry out investigation from multiple channels.

3. Being risk-oriented when carry out audit work in key businesses. In 2014, the audit mainly

focused on the company's key business and new business risk, management and operation security

of information system, fraud risk, operational risk, credit asset quality and the like, and carried out

internal control assessment audit project of branch. Comprehensive self-examinations of business

operation and internal control within the company are carried out to find correct measures for

problems discovered in supervision and inspection..

4. Promote audit information construction,and improve off-site audit management; complete phase

II construction of audit monitoring system, add main businessflow early warning and verification

model platform, and realize seamless joint to important system; optimize audit management

platform, strength integrated management of audit work formulate and perfect off-site

management system and operation manual, and establish dynamic optimization mechanism of audit

model.

5. Pay attention to personnel training, strengthen internal and external communication mechanism;

implement stratified training program on auditors, carry out internal and external shift of the

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auditors and new staff tutorialsystem; through such ways as line meeting, monthly sharing session,

symposium and topic salon, enhance internal exchange and learning, and learn from advanced audit

methods by visiting OCBC, visting banks , etc.

6. Strengthen audit quality control, improve applicablequality of audit results; comprehensively

evaluate the quality and process of audit project; in accordance with audit program, full-process

quality is controlled from approval of audit project to settlement of the audit project ; enhance the

head office's performance assessment on the audit department of the branch by the head office,

organize audit seminar and project summing-up meeting every season, and carry out audit project

quality inspection.

7. Actively promote the self-assessment of internal control; formulate clear standards of major

defects, from two aspects, namely qualitative and quantitive; from five elements of internal

control, test the main fields in the enterprise level, namely HR, risk identification, assessment

and management, company policy and process, information and communication, etc.; from main

business line, test such important fields as banker's acceptance bill, personal loan, credit card,

circulating fund loan, expense management, non-performing asset management, bill discount,

settlement management, operation management and control, trade financing, etc.; formulate

internal control defect assessment summary sheet, and propose rectification suggestions, thus

forming a self-assessment report for internal control.

(III) Establishment and implementation of internal audit system

Information about internal controlYes/

No/Not Applicable

Remarks/Instruction

I. Establishment of internal audit system

1. Did the Company establish internal audit system? Was the internal audit system discussed and approved by the Board of Directors?

Yes

2. Did the Company set up an audit committee? Did the Company set up an internal audit department independent of the finance department?

Yes

3. (1) Are all the members of the audit committee directors? Do independent directors take up at least 50% of the audit committee and take the position of convener? Is any one of independent directors in the audit committee specializing in accounting?

Yes

(2) Are there over three (included) employees specially appointed for internal audit work for the internal audit department?

Yes


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II. Disclosure of annual self-assessment report related to internal control

1. Did the Company issue an annual internal control self-assessment report based on related regulations?

Yes

2. Did the internal control self-assessment report conclude that the internal control was effective? (If it was not effective, please state the material deficiency of internal control.)

Yes

3. Was a public certified accountant firm appointed to issue an audit report on the effectiveness of internal control?

Yes

4. Did the public certified accountant firm issue a standard audit report on the effectiveness of internal control? If the public certified accountant firm issue a non-standard audit report or pointed out the deficiency of internal control over non-financial report, did the Board of Directors and the Board of Supervisors make statement on related issues?

Yes

5. Did the independent directors and the Board of Supervisors explicitly express approval? (If objection, please state reasons)

Yes

6. Did the sponsor organization and the sponsor deputy explicitly express approval based on examination (if applicable)

Not applicable

III. Major duties and achievements of the audit committee and the internal audit department for this year

During the reporting period, internal audit of the Company exercised the power of internal auditing independently in accordance with authorization of the Board of Directors, and be free from interference by any department or individual. The internal audit department did not participate in specific business operations within the scope of other departments' functions and responsibilities to ensure the independence of the internal audit.

During report period, Audit Department of Head Office conducted 83 audits with a focus on key businesses and new business risks of the company, management and safety operation of information system, fraud risk, operational risk and quality of credit assets, etc. In the first half of the year, based on the inspection by China Banking Regulatory Commission (CBRC), the department carried out an overall review of business operation and internal control of the company with emphasis placed on internal control, credit business and risk & control on the aspect of non-credit business. Meanwhile, risk audit of staff ethics was continued to be promoted and operational risks were strictly controlled.

During report period, the company promoted the 2nd-phase construction of audit monitoring system. Platforms of early-warming model and verification model of main business process were newly added, which were seamlessly integrated into important systems. At the same time, the 1st-phase of audit monitoring system was promoted to practice. Off-site audit tools were effectively applied to on-site audit tools, which improved the efficiency of audit work.

During report period, the company continued to enhance the construction of internal audit system and to intensify audit quality control, perfected management system of internal audit, formulated off-site management system and operation manual, and improved management mechanism of monitoring system model. Besides, overall control and assessment were carried out in quality and process of audit project, dynamic optimization mechanism of audit model was constructed and quality of system monitoring was upgraded. Meanwhile, track management of rectification was strengthened, mechanisms of audit warming and result correction were enhanced and application quality of audit results was improved.

IV. Other information required for instruction (if any)

None

Information about internal controlYes/

No/Not Applicable

Remarks/Instruction

2014 ANNUAL REPORT

152


III. Statement of Board of Directors on the responsibility of internal control

The board of directors of the Company shall be responsible for the establishment and

implementation of the internal control in the financial report. The internal control in the financial

report is to ensure the authenticity, integrality and reliability of the financial report, and to

prevent any significant misrepresent. As there's limit in the internal control, we could only provide

reasonable guarantee for the above mentioned goals.

IV. Basis for the establishment of internal control of the financial report

The Company established the internal control for the financial report on the basis of Commercial

Bank Law of the People's Republic of China, the Operation Guidance for Enterprises to be listed

in the SME Board under Shenzhen Stock Exchange. The Company established and executed the

Management System of Bank of Ningbo on Information Disclosure and the Call to Account System

on Significant Misrepresent in the Annual Report of Bank of Ningbo Co., Ltd.

V. Annual self-assessment report related to internal control

Significant mistake in the annual self-assessment report related to internal control

There's no significant mistake in the internal control during the reporting period.

Date of issue of Annual self-assessment report related to internal control

April 28, 2015

Index of Annual self-assessment report related to internal control http://www.cninfo.com.cn

VI. Audit report on internal control

The auditing opinion in the Audit report on internal control

We believe that, on Dec 31, 2014, Bank of Ningbo Co., Ltd., as based on the Basic Regulation on Enterprises' Internal Control, as well as other related regulations, maintained an effective internal control in all the significant aspects in the financial statement.

Date of issue of audit report on internal control April 28, 2015

Index of audit report on internal control http://www.cninfo.com.cn

The audit report on internal control, as issued by the certified public accountants, is accordant with

the self-assessment report submitted by the board of directors of the Company.

VII. Internal control self-assessment by the Board of Directors, as well as opinion

of Board of Supervisors and independent directors

(1) Internal control self-assessment by the Board of Directors

The board of directors believes that: based on the identification of significant deficiency in the


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financial reports related to internal control, by the base date of internal control evaluation report

(31st Dec, 2014), the Bank had maintained effective internal control over financial reports in all the

major aspects in accordance with the requirements of the internal control standardized system and

relevant regulations, and no significant deficiency had been found. In terms of the identification of

significant deficiency in the non-financial reporting related to internal control, by the base date of

internal control evaluation report, no significant deficiency had been found. During the base date

and the issuing date of internal control evaluation report, there's no factor occurred that may affect

the conclusion of the effectiveness evaluation over the internal control.

(2) Independent Opinions by the independent directors on the internal control self-

assessment report

We've reviewed the internal control self-assessment report and held the opinion that: the Company

had set up a relatively comprehensive corporate governance structure and an integral internal

control system in accordance with related laws and regulations, after reviewing, we believe that

2014 Internal Control Self-assessment Report of the Bank of Ningbo Co., Ltd. reflects the actual

construction and operation of the internal control system of the Company comprehensively,

objectively and authentically.

Independent director：Tang Sining, Zhu Jiandi, Yang Xiaoping,

Fu Jianhua, Fu Jijun, Ben Shenglin

(3) Opinions by the Board of Supervisors on the internal control self-assessment report

The Board of Supervisors believes that the Company has established a comprehensive internal

control system according to the Basic Regulations on the Internal Control of Enterprise and the

Guidance on the Internal Control Assessment of Enterprise, the internal control system is of

scientific construction, effective implementation and adequate supervision. The internal control

self-assessment report reflects the construction and operation of the internal control system

authentically and objectively.

VIII. Establishment and implementation of Call to Account System on Significant

Misrepresent in the Annual Report

The Company strictly implemented the Call to Account System on Significant Misrepresent in the

Annual Report, as well as the Management System on Information Disclosure. During the reporting

period, there're no significant accounting errors, miss information supplement and amendment on

performance preannouncement.

2014 ANNUAL REPORT

154

Chapter Twelve Financial Statements

I. Audit Report (see appendixes)

II. Unqualified Audit Report based on 2014 financial statements issued by Ernst &

Young Hua Ming Certified Public Accountants.

Ⅲ. Financial statements (see appendixes)

Ⅳ. Notes to the financial statements (see appendixes)


155

Chapter Thirteen Catalogue

Ⅰ. 2014 Annual Report with signature of Mr. Lu Huayu, Chairman of the Board of

Directors.

Ⅱ. Financial Statements signed and stamped by Mr. Lu Huayu, Legal

Representative of the Company, Mr. Luo Mengbo, President of the Bank, Mr.

Luo Weikai, CFO of the Bank, and Ms. Sun Hongbo, Principal of the Accounting

Department.

Ⅲ. Original Audit Report signed and stamped by the accounting firm and CPAs.

1562014 ANNUAL REPORT

Chapter Fourteen Audited Financial Statements

BANK OF NINGBO CO., LTD.

Audited Financial Statements

31 December 2014

157BANK OF NINGBO Co.,Ltd

Contents

I. Independent Auditor's Report --------------------------------------------------------- 158

II. Audited Financial Statements

Consolidated Balance Sheet ----------------------------------------------------------159

Consolidated Income Statement ---------------------------------------------------- 161

Consolidated Statement of Changes in Shareholders' Equity --------------- 163

Consolidated Cash Flow Statement ----------------------------------------- 165

Balance Sheet ----------------------------------------------------------------------------- 167

Income Statement ------------------------------------------------------------------- 169

Statement of Changes in Shareholders' Equity ------------------------------- 171

Cash Flow Statement ------------------------------------------------------------------ 173

Notes on the Financial Statements ------------------------------------------------- 175

Supplementary Information of Financial Statements

1. Statement of Non-operating Gains or Loss ---------------------------- 278

2. ROE (Return on Equity) and Earnings per Share --------------------- 278


Independent Auditor's ReportA.Y.H.M. (2015) No. 60466992_B01

Shareholders of Bank of Ningbo Co., Ltd.:

We have audited the attached financial statements of Bank of Ningbo Co., Ltd. (hereinafter referred to as

the "Bank" ), including the Consolidated Balance Sheet, Consolidated Income Statement and the Consolidated

Statement of Changes in Shareholders' Equity and Cash Flow Statement of 2014, as well as Balance Sheet at

31 December 2014, Income Statement for the year of 2014, Statement of Changes in Shareholders' Equity and

Cash Flow Statement as well as Notes to the Financial Statements.

I．Management's Responsibility for Preparing of the Financial Statements

The management are responsible for the preparation of the financial statements and for being satisfied that

they give a true and fair view. These responsibilities include: 1) Preparing the financial statements in accordance

with the Accounting Standards for Business Enterprises, and ensuring it to achieve a fair presentation; 2)

Designing, implementing and maintaining internal controls relevant to the preparation of financial statements

that are free from material misstatement.

II. Responsibility of CPA

Our responsibility is to express an audit opinion on the financial statements based on our audit. We conducted

audit in accordance with the China's Independent Auditing Standards, which requires us to comply with

professional ethical requirements, to plan and to perform the audit, and to obtain reasonable assurance on

whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the

financial statements. The procedure selected depends on the auditor's judgment, including the assessment of

risks incurred by material misstatement of the financial statements, whether due to fraud or error. In making

those risk assessments, the auditor considers internal control relevant to the entity's preparation of the financial

statements and assurance of a fair presentation in order to design audit procedures that are appropriate

in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's

internal control. An audit also includes evaluating the appropriateness of accounting policies used and the

reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of

the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

audit opinion.

III. Opinions arising from our audit

In our opinion, the financial statements of Bank of Ningbo Co., Ltd. have been properly prepared in accordance

with the Accounting Standards for Business Enterprises in all material respects, which gives a fair view of the

financial position of the Bank as at 31 December 2014 and of the Bank's operation outcomes and cash flows in

the year then ended.

Ernst & Young Hua Ming Certified Public Accountants CPA, PRC: Guo Hangxiang

CPA, PRC:Zhang Yu

Beijing, China 24 April, 2015


Consolidated Balance Sheet

*See Note II.2 for restatement.The Notes from page 175 to 277 are components of the Financial Statements

Assets: Note VI 31 Dec. 201431 Dec. 2013

(restatement)*

Cash and balances at central banks 1 70,953,938 62,194,816

Due from banks 2 30,447,600 38,964,591

Nobel Metal - 33,159

Loans to banks 3 2,866,596 548,000

Financial assets designated at fair value with its change enter into income ststement

4 8,878,979 1,178,908

Derivative financial assets 5 1,293,140 2,110,285

Reverse repurchase agreements 6 17,079,001 39,537,850

Interest receivable 7 3,015,047 1,972,905

Loans and advances 8 204,749,878 167,302,170

Available-for-sale financial assets 9 120,109,026 90,368,707

Held-to-maturity investments 10 16,569,101 15,949,957

Accounts receivable held for investment 11 71,554,844 36,083,540

Investment real estate 12 16,596 16,609

Fixed assets 13 3,352,019 2,392,068

Intangible assets 14 208,642 147,596

Deferred income tax assets 15 769,245 867,712

Other assets 16 2,248,966 2,519,156

Total assets 554,112,618 462,188,029

Liabilities Note VI 31 Dec. 201431 Dec. 2013

(restatement)*

Due to Central Bank - 200,000

Due to banks and other financial institutions 18 86,634,335 89,986,906

Deposits by banks 19 14,071,981 13,015,003

Financial liabilities designated at fair valuewith its change enter into income statement

20 1,272,100 -

Derivative financial liabilities 5 1,303,488 2,145,671

Repurchase agreements 21 28,155,132 37,139,833

Deposits 22 306,531,829 255,278,327

Wages and salaries payable 23 1,098,768 1,018,894

For The Financial Year 2014Unit: (CNY) Thousand


* See Note II.2 for restatement

The Notes from page 175 to 277 are components of the Financial Statements

The Financial Statements from page 159 to 277 are signed by:

Legal Representative: Lu Huayu President: Luo Mengbo

Financial Principle：Luo Weikai Principal of accounting institution: Sun Hongbo

Seal：Bank of Ningbo Co.,Ltd

Taxes payable 24 795,134 683,906

Interests payable 25 5,587,627 4,460,045

Bonds payable 26 50,655,391 18,466,246

Deferred income 29,496 48,886

Deferred income tax liabilities 15 3,871 3

Other liabilities 27 23,809,254 14,222,421

Total liabilities 519,948,406 436,666,141

Shareholders' equity

Equity 28 3,249,829 2,883,821

Capital reserve 29 10,598,201 7,889,125

Other comprehensive income 30 309,130 (726,252)

Surplus reserve 31 2,531,957 1,970,844

General risk reserve 32 4,054,719 2,859,911

Retained earnings 33 13,347,261 10,629,244

Equity attributable to the parent company 34,091,097 25,506,693

Minority Shareholders' Equity 73,115 15,195

Total shareholders' equity 34,164,212 25,521,888

Total liabilities and equity 554,112,618 462,188,029

Consolidated Balance Sheet（continued）

Liabilities Note VI 31 Dec. 201431 Dec. 2013

(restatement)*



The Notes from page 175 to 277 are a component of the Financial Statements

Consolidated Income Statement

Note VI 2014 2013

I. Operating income 15,356,750 12,761,479

Net interest income 34 13,354,681 11,258,689

Interest income 34 28,175,470 23,494,890

Interest expense 34 (14,820,789) (12,236,201)

Net fee and commission income 35 2,485,043 1,619,336

Fee and commission income 35 2,696,649 1,795,828

Fee and commission expense 35 (211,606) (176,492)

Investment gains 36 164,941 120,799

Gains from the adjustment of fair value 37 148,680 (154,182)

Exchange gains (830,135) (114,378)

Other operating income 38 33,540 31,215

II. Operating expenditure (8,330,173) (6,701,448)

Business tax and surcharges 39 (866,826) (771,271)

Operating and administration expenses 40 (4,924,683) (4,448,668)

Assets impairment losses 41 (2,521,150) (1,480,052)

Other operating expenses 38 (17,514) (1,457)

III. Operating profits 7,026,577 6,060,031

Add: non-operating income 42 20,149 32,983

including：incomes from disposal of non-current assets

2,448 172

Less: non-operating expenditure 43 (39,834) (41,635)

including：losses fromdisposal of non-current assets (2,348) (20,635)

IV. Total profits 7,006,892 6,051,379

Less: income tax 44 (1,372,762) (1,204,114)

V. Net profits 5,634,130 4,847,265

including：Net profit attributable to the parent company

5,627,466 4,847,071

Minority shareholders' income and loss 6,664 194

For The Year Ended 31 December 2014Unit: (CNY) Thousand



Consolidated Income Statement（continued）

VI. Other comprehensive income, net of tax 1,035,210 (736,382)

Net profit attributable to the parent company 30 1,035,382 (736,383)

Other comprehensive income will subsequently be reclassified to the income statement

1,035,382 (736,383)

After Fair value change on financial assets available for sale

1,035,382 (736,383)

Other comprehensive Income and losses attributable to minority shareholders'

(172） 1

VII. Accumulated comprehensive Income 6,669,340 4,110,883

including: Net profit attributable to the parent company

6,662,848 4,110,688

attributable to the minority shareholders 6,492 195

VIII. Earnings per share (in CNY yuan)

Basic earnings per share 45 1.89 1.68

Diluted earnings per share 45 1.89 1.68

Note VI 2014 2013



2014

Item

Equity attributable to the parent company Equity attributable to the parent companyMinority

Shareholders' Equity

Total Shareholder's

equity

Share Capital

Capital Reserve

Other comprehensive

income

Surplus Reserve

General Reserve

Undistributed Profits Subtotal

I. Balance at the end ofthe previous year * 2,883,821 7,889,125 (726,252) 1,970,844 2,859,911 10,629,244 25,506,693 15,195 25,521,888

II. Increase/decrease 366,008 2,709,076 1,035,382 561,113 1,194,808 2,718,017 8,584,404 57,920 8,642,324

(I)Total comprehensive income - - 1,035,382 - - 5,627,466 6,662,848 6,492 6,669,340

(II)Increase/decrease of assets by shareholders 366,008 2,709,076 - - - - 3,075,084 51,428 3,126,512

1. Shareholder's investment 366,008 2,710,504 - - - - 3,076,512 50,000 3,126,512

2. Others - (1,428) - - - - (1,428) 1,428 -

(III)Profit distribution - - - 561,113 1,194,808 (2,909,449) (1,153,528) - (1,153,528)

1. Appropriation to surplus reserve - - - 561,113 - (561,113) - - -

2. Appropriation to general reserve(note) - - - 1,194,808 (1,194,808) - - -

3. Profit distribution to shareholders - - - - - (1,153,528) (1,153,528) - (1,153,528)

III. Balance at the end of the year 3,249,829 10,598,201 309,130 2,531,957 4,054,719 13,347,261 34,091,097 73,115 34,164,212

2013

Item



Total Shareholder's

equityShare

CapitalCapital

Reserve

Other comprehensive

income

Surplus Reserve

General Reserve


I. Balance at the end of the previous year 2,883,821 7,889,125 10,131 1,486,303 1,499,934 8,347,646 22,116,960 - 22,116,960

II. Increase/decrease - - (736,383) 484,541 1,359,977 2,281,598 3,389,733 15,195 3,404,928

(I)Total comprehensive income - - (736,383) - - 4,847,071 4,110,688 195 4,110,883

(II)Increase/decrease of assets by shareholders - - - - - - - 15,000 15,000

1. Shareholder's investment - - - - - - - 15,000 15,000

2. Others - - - - - - - - -

(III)Profit distribution - - - 484,541 1,359,977 (2,565,473) (720,955) - (720,955)


2. Appropriation to general reserve(note) - - - - 1,359,977 (1,359,977) - - -

3. Profit distribution to shareholders - - - - - (720,955) (720,955) - (720,955)

III. Balance at the end of the year 2,883,821 7,889,125 (726,252) 1,970,844 2,859,911 10,629,244 25,506,693 15,195 25,521,888

Consolidated Statement of Changes in Shareholders' Equity

*See Note II.2 for restatement.


Note: including general reserve by subsidiary amounted to CNY 93,000.


2014

Item



Total Shareholder's

equity

Share Capital

Capital Reserve

Other comprehensive

income

Surplus Reserve

General Reserve


I. Balance at the end ofthe previous year * 2,883,821 7,889,125 (726,252) 1,970,844 2,859,911 10,629,244 25,506,693 15,195 25,521,888

II. Increase/decrease 366,008 2,709,076 1,035,382 561,113 1,194,808 2,718,017 8,584,404 57,920 8,642,324

(I)Total comprehensive income - - 1,035,382 - - 5,627,466 6,662,848 6,492 6,669,340

(II)Increase/decrease of assets by shareholders 366,008 2,709,076 - - - - 3,075,084 51,428 3,126,512

1. Shareholder's investment 366,008 2,710,504 - - - - 3,076,512 50,000 3,126,512

2. Others - (1,428) - - - - (1,428) 1,428 -

(III)Profit distribution - - - 561,113 1,194,808 (2,909,449) (1,153,528) - (1,153,528)


2. Appropriation to general reserve(note) - - - 1,194,808 (1,194,808) - - -

3. Profit distribution to shareholders - - - - - (1,153,528) (1,153,528) - (1,153,528)

III. Balance at the end of the year 3,249,829 10,598,201 309,130 2,531,957 4,054,719 13,347,261 34,091,097 73,115 34,164,212

2013

Item



Total Shareholder's

equityShare

CapitalCapital

Reserve

Other comprehensive

income

Surplus Reserve

General Reserve


I. Balance at the end of the previous year 2,883,821 7,889,125 10,131 1,486,303 1,499,934 8,347,646 22,116,960 - 22,116,960

II. Increase/decrease - - (736,383) 484,541 1,359,977 2,281,598 3,389,733 15,195 3,404,928

(I)Total comprehensive income - - (736,383) - - 4,847,071 4,110,688 195 4,110,883

(II)Increase/decrease of assets by shareholders - - - - - - - 15,000 15,000

1. Shareholder's investment - - - - - - - 15,000 15,000

2. Others - - - - - - - - -

(III)Profit distribution - - - 484,541 1,359,977 (2,565,473) (720,955) - (720,955)


2. Appropriation to general reserve(note) - - - - 1,359,977 (1,359,977) - - -

3. Profit distribution to shareholders - - - - - (720,955) (720,955) - (720,955)

III. Balance at the end of the year 2,883,821 7,889,125 (726,252) 1,970,844 2,859,911 10,629,244 25,506,693 15,195 25,521,888



Consolidated Cash Flow Statement

Note V Year 2014 Year 2013

I. Cash flow from operating activities

Net increase in deposits from customers 59,584,332 58,115,241

Net increase in loan from the central bank - 200,000

Cash received from interest, fees and commission 19,877,814 18,104,020

Net increase in placements from other financial institutions

13,906,254 25,651,419

Other cash received relatingto operating activities 47 242,023 273,869

Sub-total of cash inflow fromoperating activitie 93,610,423 102,344,549

Net increase in loans and advance payments to customers

38,470,189 26,078,040

Net increase in balances with central bank and due from other banks

11,830,278 21,872,202

Net decrease in due to central bank 200,000 -

Cash paid to interest, fees and commission 13,126,493 10,050,317

Cash paid to and on behalf of employees 2,444,169 2,029,276

Taxes paid 2,422,096 2,170,728

Cash paid relating to other operating activities 48 2,340,901 1,406,867

Sub-total of cash outflow from operating activities 70,834,126 63,607,430

Net cash flow from operating activities 49 22,776,297 38,737,119

II. Cash flow from investing activities

Cash received from investment 707,696,130 490,506,396

Cash received from returns on investment 10,277,215 5,736,879

Other cash received relating to investing activities 17,045 14,119

Sub-total of cash inflow from investing activities 717,990,390 496,257,394

Cash paid as investment 779,485,868 536,373,316

The Notes from page 175 to 277 are part of the Financial Statement



Consolidated Cash Flow Statement（continued）


Cash paid for the purchase of fixed assets, intangible assets and other long-term activities

1,135,934 1,415,481

Sub-total of cash outflow from investing activities 780,621,802 537,788,797

Net cash flow from investing activities (62,631,412) (41,531,403)

III. Cash flow from financing activities

Proceeds from investment absorbing 3,126,512 15,000

Including: cash received from subsidiary by absorption from minority of shareholders.

50,000 15,000

Proceeds from issue of bonds 37,180,740 7,986,500

Sub-total of cash inflow from financing activities 40,307,252 8,001,500

Cash for payment of borrowing 5,000,000 -

Cash paid for distribution of dividends or profits, or cash paid for interests

1,982,065 1,230,705

Sub-total of cash outflow from financing activities 6,982,065 1,230,705

Net cash flow from financing activities 33,325,187 6,770,795

IV. Effect of foreign exchange rate changes on cash (11,437) (71,786)

V. Net increase in cash and cash equivalents of the year (6,541,365) 3,904,725

Add: balance of cash and cash equivalents at the beginning of the year

52,211,382 48,306,657

VI. Balance of cash and cashequivalents at the end of the year

46 45,670,017 52,211,382

Note V Year 2014 Year 2013



Balance Sheet

Note XIV 31 Dec. 201431 Dec. 2013

(restatement)*

Assets:

Cash and balances at central banks 70,866,846 62,194,789

Due from other banks 30,447,600 38,964,591

Nobel Metal - 33,159

Loans to other banks 2,866,596 548,000

Financial assets enter into income Statement on its fair value

8,433,216 1,178,908

Derivative financial assets 1,293,140 2,110,285

Reverse repurchase agreements 17,009,000 39,537,850

Interest receivable 3,006,475 1,972,905

Loans and advances 204,749,878 167,302,170

Available-for-sale financial assets 120,109,026 90,358,697

Held-to-maturity investments 16,569,101 15,949,957

Accounts receivable held 71,554,844 36,083,540

Long-term equity investment 1 135,000 135,000

Investment real estate 16,596 16,609

Fixed assets 2 3,346,879 2,386,833

Intangible assets 205,245 143,391

Deferred income tax assets 769,245 867,712

Other assets 2,210,260 2,515,800

Total assets 553,588,947 462,300,196

Liabilities:

Due to Central Banks - 200,000

Deposits by banks and other financial institutions 86,652,009 90,118,743





Balance Sheet (continued)

Borrowings from other banks 14,071,981 13,015,003

Financial liabilities enter into income Statement on its fair value

911,324 -

Derivative financial liabilities 1,303,488 2,145,671

Repurchase agreements 28,084,562 37,139,833

Deposits 306,531,703 255,278,232

Wages and salaries payable 1,094,476 1,018,533

Taxes payable 792,742 682,878

Interests payable 5,587,609 4,460,280

Bonds payable 50,655,391 18,466,246

Deferred income tax liabilities 29,496 48,886

Other liabilities 23,799,796 14,220,856

Total liabilities 519,514,577 436,795,161

Shareholders' equity:

Equity 3,249,829 2,883,821

Capital reserve 10,599,629 7,889,125

Other comprehensive income 308,960 (726,261)

Surplus reserve 2,531,957 1,970,844

General Risk reserve 4,054,626 2,859,911

Retained profits 13,329,369 10,627,595

Total shareholders' equity 34,074,370 25,505,035

Total liabilities and equity 553,588,947 462,300,196

Note XIV 31 Dec. 201431 Dec. 2013

(restatement)*

Liabilities:





Income Statement

Note XIV Year 2014 Year 2013

I. Operating income 15,294,617 12,760,760

Net interest income 3 13,349,398 11,257,782

Interest income 3 28,171,966 23,494,890

Interest expense 3 (14,822,568) (12,237,108)

Net Fee and commission income 2,450,473 1,619,307

Incomes 2,662,079 1,795,799

Expenses (211,606) (176,492)

Investment gains 156,351 120,799

Gains from the adjustmen of fair value 135,016 (154,182)

Exchange gains (830,161) (114,161)

Other operating income 33,540 31,215

II. Operating expenditure (8,292,480) (6,697,271)

Business tax and surcharges (863,914) (771,269)

Operating and administration expenses (4,889,902) (4,444,493)

Impairment losses (2,521,150) (1,480,052)

Other operating expenses (17,514) (1,457)

III. Operating profits 7,002,137 6,063,489

Add: non-operating income 14,149 26,983

including：income from disposal of non-current assets

2,448 172

Less: non-operating expenditure (39,798) (41,635)

Including: loss from disposal of non-current assets

(2,348) (20,635)

IV. Total profits 6,976,488 6,048,837

Less: income tax (1,365,358) (1,203,415)

The Notes from page 175 to 277 are a component of the Financial Statements



V. Net profits 5,611,130 4,845,422

VI. Net after-tax value of other comprehensive income

1,035,221 (736,392)

Other comprehensive income will subsequently Reclassified to the income statement after

1,035,221 (736,392)

Faire value changes on financial assets available for sale

1,035,221 (736,392)

VII. Total comprehensive income 6,646,351 4,109,030


Income Statement (continued)




Statement of Changes in Shareholders' Equity

Year 2014

Item Share Capital

Capital Reserve

other comprehensive

incomeSurplus Reserve General reserves Undistributed Profits Total

I.Balance at the beginning of year (restatement)* 2,883,821 7,889,125 (726,261) 1,970,844 2,859,911 10,627,595 25,505,035

II. Increase/decrease 366,008 2,710,504 1,035,221 561,113 1,194,715 2,701,774 8,569,335

(I).Comprehensive income - 1,035,221 - - 5,611,130 6,646,351

(II).Increase/decrease of capital by shareholders 366,008 2,710,504 - - - - 3,076,512

1. Shareholders' investment 366,008 2,710,504 - - - - 3,076,512

2. Others - - - - - - -

(III).Profit distribution - - - 561,113 1,194,715 (2,909,356) (1,153,528)

1.Appropriation to surplus reserve - - - 561,113 - (561,113) -

2.Appropriation to general reserve - - - - 1,194,715 (1,194,715) -

3.Profit distribution to shareholders - - - - - (1,153,528) (1,153,528)

III. Balance at the end of the year 3,249,829 10,599,629 308,960 2,531,957 4,054,626 13,329,369 34,074,370

Year 2013(restatement)*

Item Share Capital

Capital Reserve

other comprehensive


I.Balance at the beginning of year 2,883,821 7,889,125 10,131 1,486,303 1,499,934 8,347,646 22,116,960

II. Increase/decrease - - (736,392) 484,541 1,359,977 2,279,949 3,388,075

(I).Comprehensive income - - (736,392) - - 4,845,422 4,109,030

(II).Increase/decrease of capital by shareholders - - - - - - -

1. Shareholders' investment - - - - - - -

2. Others - - - - - - -

(III).Profit distribution - - - 484,541 1,359,977 (2,565,473) (720,955)



3.Profit distribution to shareholders - - - - - (720,955) (720,955)

III. Balance at the end of the year 2,883,821 7,889,125 (726,261) 1,970,844 2,859,911 10,627,595 25,505,035




Statement of Changes in Shareholders' Equity

Year 2014

Item Share Capital

Capital Reserve

other comprehensive


I.Balance at the beginning of year (restatement)* 2,883,821 7,889,125 (726,261) 1,970,844 2,859,911 10,627,595 25,505,035

II. Increase/decrease 366,008 2,710,504 1,035,221 561,113 1,194,715 2,701,774 8,569,335

(I).Comprehensive income - 1,035,221 - - 5,611,130 6,646,351

(II).Increase/decrease of capital by shareholders 366,008 2,710,504 - - - - 3,076,512

1. Shareholders' investment 366,008 2,710,504 - - - - 3,076,512

2. Others - - - - - - -

(III).Profit distribution - - - 561,113 1,194,715 (2,909,356) (1,153,528)



3.Profit distribution to shareholders - - - - - (1,153,528) (1,153,528)

III. Balance at the end of the year 3,249,829 10,599,629 308,960 2,531,957 4,054,626 13,329,369 34,074,370

Year 2013(restatement)*

Item Share Capital

Capital Reserve

other comprehensive


I.Balance at the beginning of year 2,883,821 7,889,125 10,131 1,486,303 1,499,934 8,347,646 22,116,960

II. Increase/decrease - - (736,392) 484,541 1,359,977 2,279,949 3,388,075

(I).Comprehensive income - - (736,392) - - 4,845,422 4,109,030

(II).Increase/decrease of capital by shareholders - - - - - - -

1. Shareholders' investment - - - - - - -

2. Others - - - - - - -

(III).Profit distribution - - - 484,541 1,359,977 (2,565,473) (720,955)



3.Profit distribution to shareholders - - - - - (720,955) (720,955)

III. Balance at the end of the year 2,883,821 7,889,125 (726,261) 1,970,844 2,859,911 10,627,595 25,505,035



Cash Flow Statement


I. Cash flow from operating activities

Net increase in deposits from customers 59,584,332 58,115,241

Net increase in borrowings from from central bank - 200,000

Cash received from interest fees and commission 19,868,113 18,104,255

Net increase in placements from other financial institutions

13,906,254 25,783,256

Other cash received relating to operating activities 223,572 267,869

Sub-total of cash inflows from operating activities 93,582,271 102,470,621

Net increase in loans and advances 38,470,189 26,078,040

Net increase in balances with central banks and due from other banks

11,944,526 21,872,202

Net decrease of due from central bank 200,000 -

Cash paid for interest, fees and commission 13,128,817 10,051,224

Cash paid to and on behalf of employees 2,426,278 2,027,543

Taxes paid 2,412,657 2,170,652

Cash paid relating to other operating activities 2,324,049 1,405,945

Sub-total of cash outflow from operating activities 70,906,516 63,605,606

Net cash flow from operating activities 4 22,675,755 38,865,015

II. Cash flow from investing activities

Cash received from investment 707,273,601 490,506,396

Cash received from returns on investment 10,277,215 5,736,879

Other cash received relating to investing activities 17,045 14,119

Sub-total of cash inflow from investing activities 717,567,861 496,257,394

Cash paid as investment 779,001,869 536,498,316

Cash paid for the purchase of fixed assets, intangible assets and other long-term activities

1,133,865 1,403,502

Sub-total of cash outflow from investing activities 780,135,734 537,901,818

Net cash flow from investing activities (62,567,873) (41,644,424)





III. Cash flow from financing activities

Proceeds from investment absorbing 3,076,512 -

Proceeds from bonds issuing 37,180,740 7,986,500

Sub-total of cash inflow from financing activities 40,257,252 7,986,500

Cash for repayment of borrowings 5,000,000 -

Cash paid for distribution of dividends or profits, or cash payments for interests

1,982,065 1,230,705

Sub-total of cash outflow from financing activities 6,982,065 1,230,705

Net cash flow from financing activities 33,275,187 6,755,795

IV. Effect of foreign exchange rate changes on cash (11,504) (71,688)

V. Net increase in cash and cash equivalents of the year (6,628,435) 3,904,698

Add: balance of cash and cash equivalents at the beginning of the year

52,211,355 48,306,657

VI. Balance of cash and cash equivalents at the end of the year 45,582,920 52,211,355

Cash Flow Statement (continued)




Notes on the Financial Statements

I. Group Profile

1. Company History

Bank of Ningbo Co., Ltd. (the "Bank" ), which was previously known as Ningbo Commercial Bank,

is a joint-stock commercial bank established on 31 March 1997 in accordance with "Notice on the

Establishment of City Cooperative Banks" issued by State Council (G.F.[1995]No.25) and on the

basis of document no. Y.F.(1997)136 by People's Bank of China. Originally named as "Ningbo City

Cooperative Bank Co., Ltd.", it was changed to "Ningbo Commercial Bank Co., Ltd." on 2 June 1998,

approved by People's Bank of China, Ningbo Branch. The Bank was renamed as "Bank of Ningbo

Co., Ltd." on 13 February 2007 upon the approval of CBRC. On 19 July 2007, the Bank was listed

on the Shenzhen Stock Exchange , with the stock code of 002142.

The Bank holds the No. 00498103 Financial Business Operation Permit, with the institution code of

B0152H233020001. The enterprise business license No. of the Bank is 330200400003994.

The Bank is engaged in finance. Permitted business scope during the reporting period: absorption

of deposits, short-term, medium-term and long-term loan business; domestic settlements;

discounting; issuance of financial bonds; acting as distribution agent, payment agent, and

underwriter of government bonds; trading government bonds; inter-bank borrowing (lending);

bank cards; bank guarantee; payment/collection agent and insurance agent; providing safe deposit

box service; consignment loan of local fiscal revolving funds; foreign currency deposit, loans and

remittance; international settlements, foreign exchange settlement and sale; inter-bank foreign

exchange borrowing (lending); acceptance and discount of negotiable instruments in foreign

currencies; foreign currency guarantees, as well as other businesses as granted by CBRC, People's

Bank of China and the National Foreign Exchange Authority.

The Bank domiciles in No. 700, Ningnan South Road, Ningbo, Zhejiang, China. The Bank operates

within the People's Republic of China ("China").

2. Structure

By December 31, 2014, the Bank has established 10 branches and 21 primary sub-branches

with its sales department of head office and sub-branch located in downtown, suburb and county

(county-level city) of Ningbo, Zhejiang Province, and branches located in Shanghai, Hangzhou,

Nanjing, Shenzhen, Suzhou, Wenzhou, Beijing, Wuxi, Jinhua and Shaoxing. The Group has one

subsidiary company-Maxwealth Fund Management Co., Ltd ("Maxwealth Fund"). In 2014, Maxwealth

Fund invested and established Maxwealth Assets Management Co., Ltd. The consolidation scope

of consolidated financial statement is decided on the basis of control. For the changes of this year,

see Note VI for reference.



Notes on the Financial Statements (continued)

This Financial Statement was submitted and approved by board of directors of the company on Apr

24, 2015. According to the constitution of the company, it will be submitted to the shareholders'

meeting for approval.

II. Critical Accounting Policies and Estimates

1. Basis for preparation

These financial statements have been prepared in accordance with "Accounting Standards for

Business Enterprises-Basic Standards" and 38 detailed accounting principles issued by the Ministry

of Finance of the People's Republic of China (the "Ministry of Finance" ) in February 2006, as well

as other guidelines, explanations and regulations issued thereafter (collectively as "Accounting

Standards for Business Enterprises").

These financial statements are prepared on the basis of sustainable operation.

The recording principle applies accrual basis and adopts historical cost for pricing except for

derivative financial instruments, financial assets/liabilities at fair value through profit or loss and

investment real estate. An impairment provision shall be correspondingly recorded in the event of

impairment.

2. Adoption of Several Amended/New Accounting Standards

From January to March in 2014, Ministry of Finance formulated Accounting Standards for Business

Enterprises No. 39 – Fair Value Measurements, Accounting Standards for Business Enterprises

No. 40 – Joint Venture Arrangement and Accounting Standards for Business Enterprises No.

41 – Disclosure of Interests in Other Entities, and amended Accounting Standards for Business

Enterprises No. 2 – Long-term Equity Investments, Accounting Standards for Business Enterprises

No. 9 – Employee Compensation, Accounting Standards for Business Enterprises No. 30 –

Presentation of Financial Statements and Accounting Standards for Business Enterprises No. 33

– Consolidated Financial Statements. These seven accounting standards mentioned above came

into force since 1 July, 2014 but they were encouraged to be implemented among overseas listed

companies ahead of schedule. In June 2014, Ministry of Finance amended Accounting Standards

for Business Enterprises No. 37 – Presentation of Financial Instruments and implemented it in

financial statements since 2014.

For financial statements, companies whose accounting policies changed due to the above

mentioned amended/new accounting standards have made adjustments according to relevant rules

of connection, and companies that needed retroactive adjustments of comparative figures have

also re-presented accordingly.




The retroactive adjustments mentioned above influenced financial statements of 2013 and 2014

mainly in following aspects:

The Group

Year of 2014 Early Balance before Adoption

Amount Affected by the Change

Early Balance after Adoption

Capital Reserve 7,162,873 726,252 7,889,125

Other Comprehensive Income - (726,252) (726,252)

Net Assets 25,521,888 - 25,521,888




Capital Reserve 7,899,256 (10,131) 7,889,125

Other Comprehensive Income - 10,131 10,131

Net Assets 22,116,960 - 22,116,960

Year of 2013 Amount Incurred before Adoption


Amount Incurred after Adoption

Net Profit 4,847,265 - 4,847,265

Other Comprehensive Income (736,382) 736,382 -

Net of Tax of OtherComprehensive Income

- (736,382) (736,382)

The Company




Capital Reserve 7,162,864 726,261 7,889,125

Other Comprehensive Income - (726,261) (726,261)

Net Assets 25,505,035 - 25,505,035




Capital Reserve 7,899,256 (10,131) 7,889,125

Other Comprehensive Income - 10,131 10,131

Net Assets 22,116,960 - 22,116,960

Year of 2013 Amount Incurred before Adoption


Amount Incurred after Adoption

Net Profit 4,845,422 - 4,845,422

Other Comprehensive Income (736,392) 736,392 -

Other Comprehensive Income, Net of Tax

- (736,392) (736,392)




III. Critical Accounting Policies and Estimates

1. Declaration of Compliance with Accounting Standards & Basis for Formulation

These financial statements comply with Accounting Standards for Business Enterprises and in all

material respects truly and accurately present the financial position of the Bank on 31 December

2014 and operation outcomes and cash flow for 2014;

2. Accounting year

Calendar year from 1 January to 31 December.

3. Recording currency

CNY as recording currency for all financial statements and CNY Thousand as monetary unit

otherwise specially instructed.

4. Business Combination

Business combination refers to a transaction or event bringing together two or more separate

enterprises into one reporting entity. Business combination are classified into the combinations

under common control and the combinations not under common control.

Business Combination under the Common Control

Business combination under the common control is a kind of combination in which all of the

combining enterprises are ultimately controlled by the same party or the same parties both before

and after the business combination and on which the control is not temporary. In a business

combination under the common control, the party which obtains the control of other combining

enterprise(s) on the combining date is the combining party, the other combining enterprise(s) is (are)

the combined party. The "combining date" refers to the date on which the combining party actually

obtains the control on the combined party.

The assets and liabilities (including goodwill) that the combining party obtains in a business

combination shall be measured on the basis of the carrying amount in the combined party on the

combining date. As for the balance between the carrying amount of the net assets obtained by the

combining party and the carrying amount of the consideration paid by it (or the total par value of

the shares issued), the share premium in the additional paid-in capital and the transferred balance

in the original system of the additional paid-in capital shall be adjusted. If it is not sufficient to be

offset, the retained earnings shall be adjusted.

Business Combination under the Non-Common Control

A business combination under non-common control is a kind of combination in which the combining



enterprises are not ultimately controlled by the same party or the same parties both before and

after the business combination. In a business combination under the non-common control, the party

which obtains the control on other combining enterprise(s) on the purchase date is the acquirer,

and other combining enterprise(s) is (are) the acquiree. The "acquisition date" refers to the date on

which the acquirer actually obtains the control on the acquired.

In a business combination under the non-common control, the identifiable assets, liabilities and

the contingent liabilities obtained from the acquiree shall be measured by the fair value on the

acquisition date.

If the sum of the fair value of the paid balances (or the fair value of the issued equities securities)

and the fair value of equity held by the acquiree before the acquisition date is larger than the fair

value of the identifiable net assets obtained from the acquiree in the combination, the balance

between them is defined as the business reputation. And the subsequent measurement shall

be measured on the basis of its costs minus the accumulative impairment. If the sum of the fair

value of the paid balances (or the fair value of the issued equities securities) and the fair value of

equity held by the acquiree before the acquisition date is less than the fair value of the identifiable

net assets obtained from the acquiree in the combination, then firstly a reexamination shall be

conducted as for the measurement of the identifiable assets, liabilities and the contingent liabilities

obtained from the acquiree, the fair value of the paid balances (or the fair value of the issued

equities securities) and the fair value of equity held by the acquiree before the acquisition date.

After the reexamination, if the sum of the fair value of the paid balances (or the fair value of the

issued equities securities) and the fair value of equity held by the acquiree before the acquisition

date is still less than the fair value of the identifiable net assets obtained from the acquiree in the

combination, the balance between them shall be recorded into the profits and losses of the current

period.

5. Consolidated Financial Statements

The consolidated category of the consolidated financial statements is on the basis of control,

including the consolidated financial statements of the Company and all of its subsidiary companies

up to 31 December 31, 20143. A subsidiary company refers to an enterprise or entity that is

controlled by the Company.

While compiling the consolidated financial statements, the subsidiary companies shall adopt the

same accounting period and accounting policies as the Company. All the assets, liabilities, equity,

revenues, expenses and cash flows arising from transactions between the companies within the

Group shall be completely eliminated on the consolidation.

Notes on the Financial Statements (continued)For The Year Ended 31 December 2014

Unit: (CNY) Thousand


If losses of the current period for the minority shareholders in the subsidiary exceed the

shareholders' equity enjoyed by them in the subsidiary at the beginning period, the balance shall still

offset the interests of the minority shareholders.

As for the subsidiary companies acquired from the business combination under the non-common

control, the business results and cash flows of the acquiree shall be included in the consolidated

financial statements since the day when the Group obtains the control until the Group terminates its

control.

While compiling the consolidated financial statements, the financial statements of the subsidiary

companies shall be adjusted on the basis of the fair value of its various identifiable assets, liabilities

and the contingent liabilities that are confirmed on the acquisition date.

As for the subsidiary companies acquired from the business combination under the common

control, the combined business results and cash flows shall be included in the consolidated financial

statements since the beginning of the period of combination. While compiling and comparing the

consolidated financial statements, the relevant programs of the earlier financial statements shall be

adjusted. Together with the reporting entity after the combination, they shall always exist since the

ultimate controlling party begins to implement its conduction of control.

In case one or more controlled factors changes due to changes of related facts and conditions, the

Group will consider whether to control the invested party.

6. Cash and Cash Equivalents

Cash refers to the cash holdings and the deposits available for payments at anytime in the Group;

cash equivalents refer to the short term and high liquidity investments held by the group that

are readily convertible to known amounts of cash and which are subject to an insignificant risk

of change in value. Cash equivalents include the non-limiting balances in the Central Bank those

with less than three months' original maturity date, due from other banks, loans to other banks,

redemptory monetary capital for sale as well as bond investment that are readily convertible to

known amounts of cash in short notice and which are subject to and insignificant risk of change in

value, with less than three months' maturity from the date of acquisition.

7. Precious Metals

Precious metals include the gold and other precious metals. Non-transactional precious metals in

the Group are measured by the cost at the time of acquisition. The subsequent measurement is

calculated by the cost and the lower net realizable value. Precious metals obtained within the Group

by the purpose of transaction shall be initially recognized by the fair value at the time of acquisition,




and the subsequent measurement should be measured by the fair value on the day of balance

sheet. The relevant changes shall be recorded into the profits and losses of the current period.

8. Foreign currency translation

Transactions in foreign currencies are translated into CNY for recording.

Foreign currency transactions are translated into the recording currency at the rate of exchange

ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign

currencies are translated into the recording currency at the applicable the rate of exchange ruling

at the balance sheet date. Any resulting exchange differences are included in the income statement,

with the exception of differences on foreign currency borrowings for the purchase of assets

subject to capitalization are recorded in the principle of capitalized borrowings. Non-monetary

items that are measured at historical cost in a foreign currency are translated using the exchange

rates ruling at the dates of the initial transactions. Non-monetary items measured at fair value in

a foreign currency are translated using the rate of exchange ruling at the date when the fair value

was determined. Exchange differences arising from the translation are recognized in the income

statement or under the item of other comprehensive income.

Foreign currency cash flow is translated into the recording currency by adopting the average

exchange rate at the occurrence of cash flow. Effect of exchange rate changes on cash, as an

adjustment item, is separately accounted in the statement of cash flow.

9. Financial instruments

The term "financial instruments" refers to the contracts under which the financial assets of an

enterprise are formed and the financial liability or right instruments of any other entity are formed.

Recognition and derecognition of financial instruments

The Group recognizes a financial asset or financial liability since it becomes a party to a financial

instrument.

A financial asset satisfies any of the following requirements, it shall be derecognized:

(1) where the rights to receive cash flows from the financial asset have expired; or

(2) where the rights to receive cash flows from the financial asset have been transferred, or where

the obligations of paying all the collected cash flow to a third party are undertaken under "pass-

through" agreements, and (a) all the risks and rewards of the ownership of this financial asset

ihave been substantially transferred, or (b) even if all the risks and rewards of the ownership of this

financial asset have neither been transferred nor retained substantially, the control of this financial

asset is not retained.




In the event that the obligations of a financial liability are performed, cancelled or expire, it shall

be derecognized. Where an existing financial liability is replaced with another financial liability

and the contractual stipulations regarding the new financial liability is substantially different from

that regarding the existing financial liability, or the stipulations of an existing financial liability are

substantially revised, the original liability shall be derecognized and the liability of replaced or

revised stipulations shall be recognized as a new financial liability. Differences arising hereby shall

be recorded in the income statement.

For buying and selling of financial assets in conventional ways, the accountant made recognition

and de-recognition according to trade date. Buying and selling of financial assets in conventional

ways refers to receiving or paying financial assets within the specified period of laws, rules or

common practices according to contract terms. Trade date refers to the date on which the financial

assets bought or sold.

Classification and measurement of financial assets

The financial assets of the Group are classified into four categories at initial recognition: financial

assets designated at fair value through profit or loss, held-to-maturity investments, loans and

receivables, available-for-sale financial assets. The Group classifies financial assets at initial

recognition and measures financial assets at fair value. The costs of transaction shall be directly

recorded in the income statement in the case of financial assets designated at fair value through

profit or loss and attributable to the initially recognized amount in the case of other categories.

The calculation of financial assets shall be in accordance with its classification.

Financial assets designated at fair value through profit or loss

Financial assets designated at fair value through profit or loss has two sub-categories: financial

assets held for trading and those designated at fair value through profit or loss at inception.

Financial assets are classified as held for trading if they satisfy any of following requirements: they

are acquired for the purpose of selling in the near term; they are part of a portfolio of identified

financial instruments that are managed together and there is evidence of recent actual pattern of

short-term profit-making; they are derivatives unless they are designated and effective as hedging

instruments, or financial guarantee contracts, or connected to the equity instrument for which

there is no quotation in the active market and whose fair value can not be reliably measured and

which must be settled by delivering the equity instrument. Financial assets held for trading are

subsequently measured at fair value. All realized and unrealized profit and loss shall be recorded in

the income statement. Interest and dividend revenues from financial assets designated at fair value

through profit or loss shall be recorded alike.




Financial assets, which satisfy any of the following conditions, can be assigned as financial assets

entered into income statement on its fair value:

(1) The assignment can eliminate or significantly reduce recognition or measurement

inconsistencies of relevant gains or losses that would arise from different measurement bases of

financial instruments.

(2) It is specified in official written file of risk management or investment strategy that the financial

instrument set is managed, evaluated and reported to key managers on the basis of fair value.

(3) Mixed financial instruments containing one or more embedded derivative instruments, except

the derivative instruments have no significant effect on the cash flow of the mixed instruments, or

such derivative instruments shall not be separated from the mixed instruments.

(4) Mixed instruments containing embedded derivatives that need to be partitioned but is not able

to be solely measured upon acquisition or on subsequent balance sheet date.

Equity instrument investment that has no quoted price in an active market and whose fair value

cannot be measured reliably shall not be assigned as financial asset entered into income statement

on its fair value.

Financial assets classified as financial assets entered into income statement on its fair value by

enterprise at the initial recognition shall not be reclassified as other financial assets; nor shall other

financial assets be reclassified as financial assets entered into income statement on its fair value.

Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable

payments and fixed maturities that the Group has the positive intention and ability to hold until

maturity. After initial measurement, held-to-maturity investments are subsequently measured at

amortized cost using the effective interest method. Gains and losses are recognized in the income

statement when the held-to-maturity investments are derecognized or impaired, as well as through

the amortization process.

Loans and receivable

Loans and receivables are non-derivative financial assets with fixed or determinable payments

that are not quoted in an active market. After initial measurement, loans and receivables are

subsequently measured at amortized cost using the effective interest method. Gains and losses

are recognized in the income statement when such assets are derecognized or impaired, as well

as through the amortization process. Loans and receivable mainly include tha issuing of loans and

advance payment, receivables, as well as discount on notes.

Discount on notes refer to such funds used for the discount of premature notes. Discount on notes




is calculated by the par value lesses the unrealized discount interest. The interest of discount of

notes is confirmed by means of actual interest method.


Available-for-sale financial assets are non-derivative financial assets which are designated at initial

recognition or are not classified in any of the three preceding categories. After initial recognition,

available-for-sale financial assets are subsequently remeasured at fair value. Premiums and

discounts on available-for-sale financial assets are amortized using the effective interest method

and are taken as interest income or expense. Except for impairment loss and exchange rate

differences rising from monetary financial assets in foreign currency, changes in fair value of

available-for-sale financial assets are recognized as other comprehensive income in the item of

capital reserve until the financial asset is derecognized or determined to be impaired at which

time the cumulative gains or losses previously recorded in equity are transferred to the income

statement. Interest and dividend revenues from available-for-sale financial assets are recorded in

the income statement.

Where the intention of holding or the ability to hold changes, or the fair value can not be reliably

measured any more, or the term of holding has exceeded the restricted term for held-to-maturity

investments (latest three accounting years including this year), which makes it no longer suitable to

measure the financial asset at fair value, the Bank shall measure the said financial asset on the basis

of amortized cost. Such amortized cost at the re-classification day shall be the fair value or carrying

amount of the financial asset. Where such financial asset has a fixed date of maturity, the gains

or losses that are related to the said financial asset and that are directly included in the owner's

equity, together with the differences between the amortized cost and the amount at the maturity

date, shall be amortized within the remaining period of the said financial asset using the effective

interest method and recorded into the income statement. Where such financial asset does not have

a fixed date of maturity, the gains or losses mentioned above shall remain in the owner's equity and

recorded into the income statement when the said financial asset is transferred out at its disposal.

Classification and measurement of financial assets

The financial liabilities of the Group are classified at initial recognition as: financial liabilities

designated at fair value through profit or loss, other financial liabilities. The Group classifies financial

liabilities at initial recognition. The costs of transaction shall be directly recorded in the income

statement in the case of financial liabilities designated at fair value through profit or loss and

attributable to the initially recognized amount in the case of other liabilities.

Financial liabilities designated at fair value through profit or loss

Financial liabilities designated at fair value through profit or loss have two sub-categories: financial




liabilities held for trading and those designated at fair value through profit or loss at inception.

Financial liabilities are classified as held for trading if they satisfy any of following requirements:

they are acquired for the purpose of repurchase in the near term; they are part of a portfolio of

identified financial instruments that are managed together and there is evidence of recent actual

pattern of short-term profit-making; they are derivatives unless they are designated and effective

as hedging instruments, or financial guarantee contracts, or connected to the equity instrument for

which there is no quotation in the active market and whose fair value can not be reliably measured

and which must be settled by delivering the equity instrument. Financial liabilities held for trading

are subsequently measured at fair value. All realized and unrealized profit and loss shall be recorded

in the income statement.

Financial assets, which satisfy any of the following conditions, can be assigned as financial assets

entered into income statement on its fair value:

(1) The assignment can eliminate or significantly reduce recognition or measurement

inconsistencies of relevant gains or losses that would arise from different measurement bases of

financial instruments.

(2) It is specified in official written file of risk management or investment strategy that the financial

instrument set is managed, evaluated and reported to key managers on the basis of fair value.

(3) Mixed instruments contaning one or more embedded derivative instruments, unless the

embedded derivative instruments have no significant effect on the cash flow of the mixed

instruments, or such derivative instruments shall not be separated from the mixed instruments.

(4) Mixed instruments containing embedded derivatives that need to be partitioned but is not able

to be solely measured upon acquisition or on subsequent balance sheet date.

Financial assets classified as financial assets entered into income statement on its fair value by

enterprise at the initial recognition shall not be reclassified as other financial assets; nor shall other

financial assets be reclassified as financial assets entered into income statement on its fair value.

According to the criteria mentioned above, the financial liability assigned by the group includes

rights and interests of consolidated securities investment funds and assets management plan

enjoyed by other investors other than the group.

Other financial liabilities

Other financial liabilities are subsequently measured at amortized cost using the effective interest

method.

Offset of financial instrumen

After the following conditions are satisfied, financial assets and financial liabilities are listed in




balance sheet as the net amount after offsetting each other: the financial assets and liabilities have

the legal right to offset recognized amount and the legal right is currently executable; they are listed

on their net amount, or the financial assets is realized with the financial liability being liquidated at

the meanwhile.

Financial guarantee contracts

Financial guarantee contracts refer to contracts between the guarantor and the creditor under

which the guarantor shall pay the debts or assume the responsibilities as agreed in case that the

debtor fails to pay the debts. Financial guarantee contracts are initially recognized and measured

at fair value. After initial recognition, financial guarantee liabilities are measured at the higher of

the the best estimate of the expenditure required to settle the obligations, and initial fair value, less

cumulative amortisation.

Derivative financial instruments

The Group uses derivative financial instruments such as forward currency contracts and interest

rate swaps to hedge its risks with foreign currency and interest rate fluctuations. Such derivative

financial instruments are initially recognized at fair value on the date when a derivative contract

is entered into and are subsequently remeasured at fair value. Derivatives are carried as assets

when their fair value is positive, or as liabilities when their fair value is negative. However, derivative

financial instruments which are connected to the equity instrument for which there is no quotation

in the active market and whose fair value can not be reliably measured and which must be settled

by delivering the equity instrument shall be measured at cost.

Any gains or losses arising from changes in fair value of derivatives that do not qualify for hedge

accounting are taken directly to the income statement.

Impairment of financial assets

An assessment is made at each balance sheet date to determine whether there is objective

evidence of impairment of financial assets as a result of one or more events that occur after the

initial recognition of those assets and whether the loss events have an impact on the estimated

future cash flows of the financial assets or group of financial assets that can be reliably estimated.

Impairment provision shall be recorded if there is such evidence. Objective evidence to impairment

of financial assets includes serious financial difficulties of distributor or debtor, debtor's breach of

contract, such as default or late payment of interest or capital and so on, bankruptcy or financial

restructure of debtor, and reduction and measurability of future cash flow predicted by public data.

Financial assets carried at amortized cost

Impairment loss for financial assets carried at amortized cost is measured as the difference

between the asset's carrying amount and the present value of estimated future cash flows (excluding




future credit losses that have not been incurred) discounted at the financial asset's original effect

interest rate (determined at initial recognition) and making reference to the value of any relevant

collaterals. The impairment loss is recorded in the income statement. With respect to floating

interest rate, the discount rate shall be the current effective interest rate determined under the

contract for calculating the present value of estimated future cash flows.

The Group first assesses whether objective evidence of impairment exists for financial assets that

are individually significant. If it exists, impairment loss is determined and recorded in the income

statement. Financial assets which are not individually significant or for which there is no evidence

of impairment after individual assessment (whether individually significant or not) are included

in a group of financial assets with similar credit risk characteristics and that group of financial

assets is collectively assessed for impairment. Assets that are individually assessed for impairment

and for which an impairment loss is or continues to be recognized are not included in a collective

assessment of impairment.

Future cash flows of a group of financial assets that are collectively evaluated for impairment are

estimated on the basis of historical loss experience for assets with credit risk characteristics similar

to those in the group. Historical loss experience is adjusted on the basis of current observable data

to reflect the impact of current conditions that did not affect the period on which the historical loss

experience is based and to eliminate the impact of historical conditions that do not exist currently.

The methodology and assumptions used for estimating future cash flows are reviewed regularly by

the Group.

If, in a subsequent period, the amount of an impairment loss decreases and the decrease can

be attributed objectively to an event occurring after the impairment, the previously recognized

impairment loss is reversed. Any subsequent reversal of an impairment loss is recognized in the

income statement, to the extent that the carrying value of the assets does not exceed its amortized

cost at the reversal date.

Financial assets carried at cost

If there is objective evidence that an impairment loss has been incurred on a financial asset, the

amount of the impairment loss is measured as the difference between the carrying amount of

that financial asset and the present value of the estimated future cash flows discounted at the

current market rate of return for a similar financial asset. Impairment losses on these assets are not

reversed.


If objective evidence of impairment exists for available-for-sale financial assets, the cumulative loss




rising from the decrease of fair value is removed from other comprehensive income and recognized

in the income statement, and is measured as the difference between the acquisition cost (net of

any principle repayment and amortization) and the current fair value, less any impairment loss on

that financial asset previously recognized in profit and loss statement.

Objective evidence to impairment of available-for-sale investment of equity instrument includes

serious or non-transient decline of fair value. "Serious" shall be judged according to the degree that

fair value is lower than cost while "non-transient" is determined according to the length of period

that fair value is lower than cost. Should there be objective evidence to impairment, accumulated

losses rolled out shall be the balance of acquisition cost less current fair value and impairment

losses in profits and losses. Impairment loss of available-for-sale investment of equity instrument

shall not be reversed through profits and losses. The increase of fair value incurred after

impairment shall be directly recognized in other comprehensive income.

When defining "serious" or "non-transient", the Group shall make judgment according to the degree

or length of period that fair value is lower than cost , combined with other factors.

For available-for-sale investment of debt instrument, the impairment shall be evaluated in the same

way as financial asset measured by amortized cost. However, the accumulated losses rolled out

shall be the balance of amortized costs less current fair value and impairment losses recorded in

profits and losses. Interest income after impairment shall be calculated and recognized as with the

interest rate as according to the discount rate adopted in discounting future cash flow to determine

impairment losses.

If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale

increases and the increase can be objectively related to an event occurring after the impairment

loss was recognized in the income statement, the impairment loss is reversed through the income

statement.

Transfer of financial assets

For financial assets with all the risk and profit of the ownership transferred to transferee, the group

would terminate the confirmation of the financial assets. For financial assets with all the risk and

profit of the ownership being retained, the group would not terminate the confirmation.

For financial assets that group has neither transferred nor retained all the risk and profit of the

ownership, those will be treated as follows: in case the financial assets are not in control any more,

the group will terminate the confirmation, and will confirm the assets and liabilitie of it; in case the

financial assets are still in control, it will be dertermined according to the related amount, with the

related liabilities being confirmed as well.




10. Repurchase and reverse repurchase agreements

Reverse repurchase agreements refer to selling an asset at agreed price and on agreed date

under the agreement signed when this asset was purchased. Repurchase agreements refer to

repurchasing an asset at agreed price and on agreed date under the agreement signed when this

asset was sold. For purchased assets to be resold, the purchase cost is recognized as lending and

these assets are recognized as collaterals for lending. For sold assets to be repurchased, these

assets are continuously reflected in the balance sheet and the revenues from selling these assets

are recognized as liabilities.

Interest revenue from reverse repurchase agreements and interest expenditure from repurchase

agreements are recognized as interest revenues and interest expenditures using the effective

interest method during agreement term.

11. Long-term equity investments

Long-term equity investments refer to equity investments on subsidiaries, joint ventures and

associated enterprises. Long-term equity investments are initially measured at initial investment

cost at the time of acquisition.

The company adopted cost methods for invested enterprises that are controlled by the group.

Control means that, the group, by using its right and participating in related activities of the

invested enterprise, can get realizable profit; and can affect the profit amount by using certain

right.

with the cost method, the price of long-term equity investments is measured at initial investment

cost. If additional investments are made or investments are retrieved, the cost should be corrected

accordingly. Cash dividends or profits which have been included in consideration and declared but

not distributed, are recognized as current investment revenues. The difference between face value

and actual transaction should be recorded in profit and loss statement.

12. Investment real estate

Investment real estate is held to generate rental income or earn capital gains or both.

Since there is an active trading market of real estate in the location of the investment real estate

owned by the Group, and the Group is able to obtain the market prices of the identical or similar

real estates and other relevant information from the trading market of real estate, so as to be able

to estimate the fair value of the investment real estate, the fair value pattern is applied for the

measurement of investment real estate.

Investment real estate is initially measured at cost. Where the economic benefits pertinent to this




real estate are likely to flow into the Group and the cost of it can be reliably measured, the relevant

follow-up expenses are included in the cost of investment real estate. Otherwise, it is recorded in

the income statement. Investment real estate converted from a fixed asset is initially measured

at fair value on the date of conversion. Differences are carried as capital reserve (other capital

reserve) if the fair value is higher than the carrying value and recorded in the income statement on

the contrary.

Thereafter, investment real estate is measured at fair value on each balance sheet date and

changes on fair value are taken into the income statement.

13.Fixed assets

Fixed assets are recognized when the related economic benefits are likely to flow into the Group

and the cost can be measured reliably. If the above requirement is satisfied, the follow-up

expenses involved are carried as cost of fixed assets and the carrying value of the replaced part is

derecognized. Otherwise, the follow-up expenses are recorded in the income statement.

Fixed assets are initially measured at cost. The cost of a fixed asset comprises its purchase price,

related taxes and any directly attributable costs for bringing the fixed asset to its present usable

condition can be recorded as other expenses of the fixed assets.

Depreciation of fixed assets is calculated on the straight-line basis. The expected useful life,

expected net salvage value and annual depreciation rate are as follows:

Category Expected Useful Life

Expected Net Salvage Value

Annual Depreciation Rate

Housing & buildings 20 years 3% 4.85%

Transportation vehicles 5-10 years 3% 9.70%-19.40%

Electronic equipments 5 years 3% 19.40%

Machinery 5-10 years 3% 9.70%-19.40%

Decoration for Self-owned house 5 years 0% 20.00%

The expected useful life, expected net salvage value and annual depreciation rate of fixed assets

are reviewed by the Group at least once at the end of each year.

14. Construction in progress

Cost of construction in progress is calculated at the actual expenditure, covering all necessary

expenses for construction and related expenses during the period of construction.




Category Useful Life

Software 5 years

Land-use rights 40 years

Membership right 10 years

Construction in progress is reclassified as fixed assets when completed and ready for use.

15. Intangible assets

Intangible assets are recognized at cost when the related economic benefits are likely to flow into

the Group and the cost can be measured reliably.

The useful life of an intangible asset is determined based on economic benefits it brings to the

Group.

Useful life of each intangible asset is as follows:

Land-use rights acquired by purchase or payment of land-transferring fees by the Group are

calculated as intangible assets. Payments for purchased land or buildings are allocated between the

land-use rights and buildings. If it is difficult to allocate, the entire payments are included in the cost

of fixed assets.

Intangible assets with limited useful life are amortized using the straight-line basis over the period

of using. The useful life and amortization of above intangible assets shall be reviewed and adjusted

if necessary by the Group at least once at the year end.

16. Long-term deferred expenses

Long-term deferred expenses refer to all expenses which have been paid with an amortization

period over 1 year (excluding 1 year).

The fixed assets rented for operation will be amortized over the rent period.

Lease expenses are incurred as the Group rented a fixed asset by operating lease and equally

amortized it over contract term.

The Group has purchased lump-sum complementary endowment for employees which are amortized

in the income statement accordingly during employment.

Amortization period for other long-term deferred expenses are equally amortized and determined

by the contract or at the shorter of the contract period and the benefit period.




In the case that the long-term deferred expenses are not beneficial for following accounting years,

the amortization value for unamortized items are transferred to the income statement.

17. Debt assets

Debt assets are initially recognized at fair value. Differences arising from the fair value and the sum

of related loan principal, confirmed interest and impairment provision are charged into the income

statements. Debt assets are subsequently measured at the lower of the carrying value and the

recoverable amount.

18. Impairment of assets

Except for investment real estate, deferred income tax and financial assets, impairment for other

assets shall be determined as follows:

The Group assesses at each date of balance sheet whether there is any evidence that an asset

may be impaired. If any such evidence exists, the Group would make an estimate of the asset's

recoverable amount and performs impairment assessment. An impairment assessment is carried

out at least once at end of the year, on goodwill arising from corporate combination and intangible

assets with uncertain useful life, regardless of the evidence of impairment. The annual impairment

assessment is also required for intangible assets which have not been ready for use.

An asset's recoverable amount is the higher of its fair value less net amount after disposal and

the present value of expected future cash flow. The recoverable amount is estimated on the basis

of an individual asset or on the basis of a group of financial assets which such asset belongs to

if its recoverable amount is unable to be estimated on individual asset basis. A group of financial

assets is recognized by determining whether the Critical cash flows arising from such group are

independent from those on other asset or group of assets.

Where the carrying amount of an asset or a group of assets exceeds its recoverable amount, the

asset is considered to be impaired and is written down to its recoverable amount. Impairment losses

are recognized in the income statement and an impairment provision is recorded.

The above impairment losses, once recognized, will not be reversed in the following accounting years.

19. Contingent liabilities

A contingent liability is a potential obligation that arises from past transactions or events and whose

existence would only be confirmed by the occurrence or non-occurrence of one or more uncertain

future events. It can also be a present obligation arising from past transactions or events that is not

recognized because it is unlikely to give rise to an outflow of economic resources or the amount




under such obligation cannot be measured reliably.

20. Anticipated liabilities

The Group recognizes anticipated liabilities when obligations related to contingencies satisfy all

following requirements:

1) present obligations undertaken by the Group;

2) the performance of obligations is likely to result in an outflow of economic resources;

3) the amount under obligations can be measured reliably.

Anticipated liabilities are initially measured based on the best expenditure estimates for the

implementation of present obligations, considering risks, uncertainty and time value of money

pertinent to contingencies. The carrying value of participated liabilities are reviewed at the date of

balance sheet. If there is substantial evidences showing that the carrying value can not reflect the

best estimates, such carrying value shall be adjusted based on the present best estimates.

21. Fiduciary activities

Where the Group acts in a fiduciary capacity such as assignee, custodian or agent, assets arising

thereon together with related undertakings to return such assets to customers are excluded from

the balance sheet.

In fund custody, the Group, as approved by related authorities, acts as the trustee to carry out

related business in accordance with the contract with client, as well as laws and regulations. The

Group undertakes its obligations and charge accordingly on the basis of the custody contract, but

it does not undertake the obligation for any risk and income arising from such custody. Therefore,

it attributes to the off-balance item.

The Group grants entrusted loans on behalf of third-party lenders who fund these loans (entrusted

deposits) and in accordance with terms covering loan object, application, amount, period and

interest rate determined by the third-party lenders. The Group has been contracted by those third-

party lenders to manage the administration and collection of these loans on their behalf. All the

risks are borne by the third-party lenders. The Group only charges a commission.

22. Recognition of income and expense

Interest income and expense

Interest income or expense is recorded at the time of occurrence using the effective interest rate,

which is the rate that exactly discounts estimated future cash payments or receipts through the




expected life of the financial instrument or a shorter period, where appropriate, to the net carrying

amount of the financial asset or financial liability. The calculation takes into account all contractual

terms of the financial instrument , including any fees or incremental costs that are an integral part

of the effective interest rate except for future credit losses. The carrying amount of the financial

asset or financial liability is adjusted if the Group revises its estimates of payments or receipts. The

adjusted carrying amount is calculated based on the original effective interest rate and the change

in carrying amount is recorded as an interest income or expense.

Fee and commission income

Fee and commission income are recognized on accrual basis after services are provided and

received payments are reasonably estimated.

Dividend income

Dividend income is recognized when the Group's right to receive payment has been established.

Rental income

Rental income from investment real estate related to operating leases are charged to the income

statement on the straight-line basis over the lease terms.

23. Employee remuneration

Employee remuneration refers to all forms of remuneration or compensatory payment paid by the

Group to employees for their service or termination of labor relationship. Employee compensation

mainly includes short-term remuneration and welfare after departure. Other welfares the Group

provides to spouse, children, dependents, members of deceased's family and other beneficiaries,

etc of employees shall also be regarded as employee compensation.

Short-term remuneration

During the accounting period when employees provide services, short-term remuneration incurred

shall be regarded as liability and is calculated into current profits and losses or relevant asset cost.

Welfare and Defined Contribution Plans after Departure

The endowment of the Group's employees are managed by local government, corresponding

expenditures incurred shall be regarded as relevant asset cost or current profits and losses.

24. Income tax

Income tax comprises current income tax and deferred income tax. Income taxe is recognized in the

income statement except to the extent that it relates to transactions or events recognized directly




in equity, in which case it is recognized in equity.

Current income tax is the expected tax payable on the taxable income for the year, calculated using

tax rates enacted and any adjustment to pre-tax accounting profit.

Current tax assets and liabilities for the current and prior periods are measured at the amount

expected to be recovered from or paid to the taxation authorities.

Deferred income tax is recognized, using the liability method, on temporary differences arising

between the carrying amounts of assets and liabilities and the amount attributed to such assets

and liabilities for tax purposes in the balance sheet, and also on temporary differences between the

carrying amounts and the tax bases of those which are not recognized as assets and liabilities, but

whose tax bases are determined in accordance with tax laws.

Deferred income tax liabilities are recognized for all taxable temporary differences, except:

(1) that are generated in the following trade: the deferred income tax liabilities occurred at the initial

recognition of goodwill, or at the initial recognition of assets or liabilities arising from transactions

with the following characteristics: the transaction is not a business combination, at the time of the

transaction, affects neither the accounting profit nor taxable income or deductible expenses.

(2) for the taxable temporary differences relevant to the investment of subsidiary companies, joint

ventures and associates, the reversed time can be controllable and the temporary differences are

unlikely to be reversed in the foreseeable future.

Deferred income tax assets are recognized for all deductible temporary differences, carryforward

of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will

be available against which the deductible temporary differences, and the carryforward of unused

tax credits and unused tax losses can be utilized, except:

(1) the deferred income tax asset, at the time of the transaction, affects neither the accounting

profit nor taxable income or deductible expenses.

(2) the deferred income tax asset is recognized for the deductible temporary differences relevant

to the investment of subsidiary companies, joint ventures and associates, which at the same time

meet the following conditions: it is probable that the temporary differences will be reversed in

the foreseeable future and the taxable profit will be available against the deductible temporary

differences.

Deferred income tax assets and deferred income tax liabilities are measured at the tax rates

expected to apply to the period when the asset is realized or the liability is settled, based on tax

rates and tax laws that have been enacted or substantially enacted at the balance sheet date and




reflecting the corresponding tax effect.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and

reduced to the extent that it is no longer probable that sufficient taxable income will be available

to allow all or part of the deferred income tax asset to be utilized. When it is virtually probable that

sufficient taxable income will be available, the reduced amount can be reversed accordingly.

In the case of the legal right of calculating the current income tax assets and the current income

tax liabilities as net value, and the deferred income tax involving the same taxpayer and the same

tax department, the deferred income tax assets and the deferred income tax liabilities shall be

recorded as net value after offset.

25. Leases

Leases which transfer substantially all the risks and rewards associated with ownership of the assets

are classified as finance leases. All leases other than finance leases are classified as operating

leases.

As a lessee under an operating lease,

rental expenses are charged in related cost or in the income statement on a straight-line basis over

the periods of the lease and contingent rental is taken into the income statement when actually

incurred.

As a lessor under an operating lease,

Rental income is recognized in the income statement on a straight-line basis over the periods of the

lease and contingent rental is taken into the income statement when actually incurred.

26. Fair Value Measurement

On each balance sheet date, the Group measures investment real estate and derivative financial

instrument by fair value. Fair value, occurring in orderly transaction on measurement date, refers

to the payment the market participant receives when an asset is sold, or the amount paid when a

liability is transferred. In the case that asset selling or liability transference is dealt with in staple

market of relevant assets or liabilities, the Group measures relevant assets or liabilities by fair value;

for the cases where there is no staple market, the Group assumes that the transaction is dealt

with in the most advantageous market of relevant assets or liabilities. Staple market (or the most

advantageous market) is the trading market the Group can enter on measurement date. The Group

adopts the same assumption that the market participant uses to maximize its economic benefit

when pricing the assets or liabilities.




For non-financial assets measured by fair value, the capability for the market participant to best

use the assets to generate economic benefit, or the capability for the market participant to sell

the assets to other market participant to best use the assets to generate economic benefit is

considered.

The Group adopts applicable valuation technique supported by adequate data and other information

available, prioritizing relevant observable input value. Only when observable input value is unable or

infeasible to be obtained, can unobservable input value be adopted.

In financial statement, assets or liabilities measured or disclosed by fair value are leveled according

to the input value of the lowest level with significance for overall fair value measurement: input value

of the first level is the unadjusted quoted price of the same assets or liabilities available in active

market on measurement date; input value of the second level is the directly or indirectly observable

input value of relevant assets or liabilities apart from input value of the first level; input value of the

third level is the unobservable input value of relevant assets or liabilities.

On each balance sheet date, the Group reevaluates the assets or liabilities continuing to be

measured by fair value recognized in financial statement, to confirm that whether there is any shift

between different levels of fair value measurement.

27. Related parties

When financial or operating decisions are made, a party is considered to be related to another party

if the party, directly or indirectly controls or jointly controls the other party, or gives its significant

influence over the other party, and two or more parties are considered to be related if they are

controlled by, jointly controlled by or significantly affected by one party.

Related parties to a company are as follows:

1) parent company;

2) subsidiaries;

3) other entities controlled by the same parent company;

4) investors which have joint control;

5) investors which give significant influence;

6) joint ventures;

7) associated companies;

8) key investors and close members of their families;




9) key management personnel of the company or its parent company, and their close family

members;

10) other entities that are controlled, jointly controlled or significantly influenced directly or

indirectly by key investors, key management personnel or their close family members.

Entities which are only controlled by the government without any other relations with other

companies are not the related parties of the Group.

28. Significant accounting judgements and estimates

As required for the preparation of financial statements, the management makes judgements

estimates and assumption that would affect reporting amounts of income, expense, assets and

liabilities as well as the disclosure of contingent liabilities at the balance sheet date. However, the

uncertainty of these estimates may result in significant adjustments on the carrying amount of

affected future assets and liabilities.

Judgements

The management makes following adjustments which have significant effects on recognized

amounts in the financial statements when applying accounting policies of the Group:

Classification of financial assets

The management have to makes significant adjustments on the classification of financial assets

which would affects accounting methods and financial position of the Bank.

Merge of Structured Bodies

Management shall judge whether it is necessary to control and merge structured bodies, which may

affect the accounting method and the Group's financial condition and business performance.

When evaluating the control, the Group shall consider: 1) investor's right against investee; 2)

variable returns enjoyed in the participation of relevant activities of investee; and 3) amount of

returns affected by the right capable to exercise against investee.

Generally, when evaluating the owned right against structured bodies, the Group shall consider the

following four aspects：

(1) decisions and engagement of the Group when investee was established;

(2) relevant contractual arrangement;

(3) relevant activities carried out only in particular cases or matters;

(4) commitments the Group made to investee.




When judging whether to control structured bodies, the Group shall also consider whether its

decision behavior is made as a main actorthe primary party or as an agent. Generally, factors

considered include scope of decision-making power, substantive rights enjoyed by other parties,

compensation level of the Group and risk of variable returns bear born by the Group as a holder of

other interests of structured bodies, etc.

Uncertainty of accounting estimates

Key assumptions concerning the future and other key sources of estimation uncertainty at the

balance sheet date hereunder may cause a material adjustment to the carrying amount of assets

and liabilities within the next financial period.

Impairment losses of loans

The Group periodically determines whether there is any objective evidence of impairment losses on

loans. If any such evidence exists, the Group assesses the amount of impairment losses which is

measured as the difference between the carrying amount and the present value of estimated future

cash flows. Assessing the amount of impairment losses requires significant judgement on whether

the objective evidence for impairment exists and also significant estimates when determining the

present value of the expected future cash flows.

Impairment of available-for-sale financial assets

The Group classifies some assets as available-for-sale assets and records their changes on

fair value into the shareholders' equity. Where the fair value declines, the management makes

assumptions to determine whether impairment losses shall be recognized in the income statement.

Impairment of non-current assets except the financial assets

The Group assesses whether there is any evidence of impairment in non-current assets except

the financial assets. If there is any evidence showing the carrying amount of a non-current asset

except for financial assets is unrecoverable, an impairment assessment would be carried out. The

management has to estimate the expected future cash flow of the asset or the asset group to

determine the present value of the expected future cash flow using the appropriate discount rate.

Fair value of financial instruments

If the market for a financial instrument is not active, the Group establishes fair value by using a

valuation technique. Valuation techniques include using the price that would be received to sell an

asset or paid to transfer a liability in an orderly transaction between market participants, if available,

reference to the current fair value of another instrument that is substantially the same, discounted

cash flow analysis and option pricing models. To the extent practicable, valuation technique makes




maximum use of market inputs. However, where market inputs are not available, management

needs to make estimates on credit risk, market fluctuation and pertinency of the Group and its

counterparties. Changes on these assumptions would affect the fair value of financial instruments.


For all deductible losses which have not been utilized, deferred income tax assets are recognized to

the extent that it is probable that the sufficient taxable income is available to cover the deductible

losses. This requires significant amount of estimation on the acquisition time and amount of future

taxable income with the tax payment strategy, to determine the amount of deferred income tax

assets to be recognized.

Category Tax basis Rate

Business tax Business income (note) 5%

Construction tax Business tax 5%-7%

Educational surcharges Business tax 5%

Business income tax Taxable income 25%

business income originates from loan interest, transfer of financial products, fees and commissions and other businesses except for inter-bank income.

Note:

IV. Taxation

The group principal taxes and their tax rates are listed as below:

Dec 31, 2014 Dec 31, 2013

Cash on hand 1,568,875 1,144,648

Statutory deposit reserve in the central banks 53,039,354 45,556,463

Provision in the central banks 15,928,301 14,875,626

Public Finance-cash In Bank in the central banks 417,408 618,079

70,953,938 62,194,816

V. Notes to Items in the Consolidated Financial Statements

1. Cash and balances with central banks

By 31 December 2014, the group's statutory deposit reserve in the central bank is calculated

according to the regulations of the people's bank of China that yuan renminbi reserve balances

shall be no less than 17.5% of the RMB deposit at the end of the early month (31 Dec. 2013:18%).

While those denominated in foreign currencies was 5% (31 Dec. 2013: 5%) of the previous month

regulated by the People's Bank of China.




2. Due from other banks

Dec 31, 2014 Dec 31, 2013

Due from domestic banks 28,779,403 37,482,988

Due from other domestic financial institutions 479,086 94,283

Due from foreign banks 1,189,305 1,387,514

30,447,794 38,964,785

Provision for depreciation(note V. 17) (194) (194)

30,447,600 38,964,591

Dec 31, 2014 Dec 31, 2013

Banks 266,686 -

Other financial institutions 2,599,910 548,000

2,866,596 548,000

3. Loans to other banks

4. Financial assets measured by fair value and enter the current profit and loss statement

Dec 31, 2014 Dec 31, 2013

Trading financial assets

Debt instrument

Government bonds 1,214,949 1

Policy financial bonds 5,708,649 922,986

Corporate bond 1,844,969 255,921

Equity instruments 84,012 -

For Financial assets measured by fair value and enter the current profit and loss statement

Equity instruments 26,400 -

8,878,979 1,178,908




Dec 31, 2014 Nominal amount Fair value

Assets Liabilities

Currency derivative instrument 181,667,738 883,933 (842,942)

Interests derivative Instrument and others 232,906,234 409,207 (460,546)

414,573,972 1,293,140 (1,303,488)

Dec 31, 2013 Nominal amount Fair value

Assets Liabilities

Currency derivative instrument 150,246,164 913,189 (1,356,651)

Interests derivative Instrument and others 110,536,877 1,197,096 (789,020)

260,783,041 2,110,285 (2,145,671)

5. Derivative financial instruments

Nominal amount and fair value of derivative financial instruments held by the Bank as follows:

The nominal amount is reflected in a full amount and represents the amount of the underlying

asset or reference index of derivatives, which is the basis of measuring changes in fair value of the

derivative financial instruments.. The nominal amount can reflect the risk exposures not settled to

the end of the year, but it can not directly reflect the market or credit risk.

6. Buying back the sale of financial assets

Dec 31, 2014 Dec 31, 2013

Classified by pledges:

Bond 17,023,001 6,094,839

Bill - 33,402,011

Lease payments receivable 56,000 41,000

17,079,001 39,537,850

Classified by counter party:

Banks 17,023,001 39,496,850

Other financial institutions 56,000 41,000

17,079,001 39,537,850




2014 Amount Proportion Bad debt provision Net value

Interest receivable on bond 1,419,726 47.09% - 1,419,726

Interest receivable on due from financial institutions 812,803 26.96% - 812,803

Interest receivable on loans 591,659 19.62% - 591,659

Interest receivable on swap 121,691 4.04% - 121,691

Other interest receivables 69,168 2.29% - 69,168

3,015,047 100.00% - 3,015,047

2013 Amount Proportion Bad debt provision Net value

Interest receivable on bond 1,007,620 51.07% - 1,007,620

Interest receivable on due from financial institutions 391,990 19.87% - 391,990

Interest receivable on loans 471,591 23.90% - 471,591

Interest receivable on swap 80,838 4.10% - 80,838

Other interest receivables 20,866 1.06% - 20,866

1,972,905 100.00% - 1,972,905

7. Interest receivable

See Note XI/3.1 for loans of shareholders with 5% or more than 5% shareholding.

Dec 31, 2014 Dec 31, 2013

Individual loans and advances

Individual consumption loan 66,652,085 46,849,314

Individualoperating loan 4,492,093 4,664,492

Individual housing loan 1,591,171 1,723,379

Total individual loans and advance 72,735,349 53,237,185

Less: allowance for impairment losses for individual (743,749) (376,113)

71,991,600 52,861,072

Corporate loans and advances

Loan 123,301,697 110,332,334

Discount 9,522,435 3,182,740

Trade finance 4,502,701 4,437,407

Total 137,326,833 117,952,481

Less: impairment provision for corporate (4,568,555) (3,511,383)

132,758,278 114,441,098

Net value of loans and advance payment 204,749,878 167,302,170

8. Loans and advance payments

8.1 Classified by corporation and individual




8.2 Classification of guarantees for loans and advance payments

Dec 31, 2014 Dec 31, 2013

Credit 60,609,001 40,664,135

Guarantee 56,585,732 50,990,205

Mortgage 77,827,511 73,080,643

Pledge 15,039,938 6,454,683

Total 210,062,182 171,189,666

Less: impairment provision (5,312,304) (3,887,496)

Net value of loans and advance payments 204,749,878 167,302,170

8.3 Overdue loans

Dec 31, 2014 1-90 days (included)

90-360 days (included)

360 days to 3 years (included)

over 3 years Total

Credit 340,903 119,968 269,542 3,472 733,885

Guarantee 895,231 614,383 110,138 1,198 1,620,950

Hypothecate 704,137 618,515 370,714 13,567 1,706,933

1,940,271 1,352,866 750,394 18,237 4,061,768

Dec 31, 2013 1-90 days (included)

90-360 days (included)

360 days to 3 years (included)

over 3 years Total

Credit 102,274 290,992 14,641 459 408,366

Guarantee 213,066 305,130 126,064 1,399 645,659

Hypothecate 125,532 344,921 152,295 37,441 660,189

440,872 941,043 293,000 39,299 1,714,214




Dec 31, 2014 Individual item Portfolio Total

Balance at the beginning of the year 643,302 3,244,194 3,887,496

Drawing in the year 1,087,207 1,332,943 2,420,150

Write-off (903,537) (79,608) (983,145)

Transfer in - 29,110 29,110

Including: received from loans for sale and reconciliation from advance payment - 29,110 29,110

Transfer in of back of depreciated loan interest (41,307) - (41,307)

Balance at the end of the year 785,665 4,526,639 5,312,304

Dec 31, 2013 Individual item Portfolio Total

Balance at the beginning of the year 416,617 2,636,297 3,052,914

Drawing in the year 672,517 646,735 1,319,252

Write-off (417,550) (39,483) (457,033)

Transfer in - 645 645

Including: received from loans for sale and reconciliation from advance payment - 645 645

Transfer in of back of depreciated loan interest (28,282) - (28,282)

Balance at the end of the year 643,302 3,244,194 3,887,496

8.4 Allowance for impairment losses

9.Available-for-sale financial assets

Dec 31, 2014 Dec 31, 2013

Available for sale debt instrument

Measured by fair value

Government bond 38,241,116 27,065,856

Policy based financial bond 2,754,315 1,035,744

Corporate bond 3,625,969 636,491

Due from other banks 3,586,260 257,964

Other financial bonds 667,435 105,394




Equity instrument available for sale

Measured by fair value

Financing products and credit plan 71,220,681 61,246,778

Stocks - 7,230

Measured by cost

Stock right investment 13,250 13,250

120,109,026 90,368,707

Dec 31, 2014 Dec 31, 2013

2014 Available for sale Equity instrument

Available for sale debt instrument Total

Equity instrument cost/debt instrument amortized cost 71,220,455 48,489,210 119,709,665

Fair value 71,220,681 48,875,095 120,095,776

Total fair value changes enter into other comprehensive income 226 385,885 386,111

71,220,681 48,875,095 120,095,776

2013 Available for sale Equity instrument

Available for sale debt instrument Total

Equity instrument cost/debt instrument amortized cost 61,247,660 30,102,195 91,349,855

Fair value 61,254,008 29,101,449 90,355,457

Total fair value changes enter into other comprehensive income 6,348 (1,000,746) (994,398)

61,254,008 29,101,449 90,355,457

Available for sale financial assets measured by fair value




Dec 31, 2014

Pledge assets Book value Pledge purpose Pledge amount Date of maturity

Available-for-sale financial assets–bond

23,860,000 Repurchase

agreements - bond21,408,970

Jan 4, 2015 -Mar 23, 2015

Dec 31, 2013


Available-for-sale financial assets–bond

16,429,700Repurchase


Jan 2, 2014-Jun 23, 2014

Details of pledges in available-for-sale financial assets as follows:

10. Held-to-maturity investments

Dec 31, 2014 Dec 31, 2013

Government bond 16,359,536 15,949,957

Bond of other finaicial institution 209,565 -

Total 16,569,101 15,949,957

2014

Account balance Impairmentshareholding

propor(%)2014 cash

dividendYear begin

Year end

Year begin

Year end

China Union Co., Ltd. 13,000 13,000 - - 0.34 450

Clearing Center for City Commercial Bank 250 250 - - 0.83 -

13,250 13,250 - - 450

2013

Account balance Impairmentshareholding

propor(%)2013 cash

dividendYear begin

Year end

Year begin

Year end

China Union Co., Ltd. 13,000 13,000 - - 0.34 400

Clearing Center for City Commercial Bank 250 250 - - 0.83 -

13,250 13,250 - - 400

Available for sale financial assets measured by cost




Details of pledges in held-to-maturity investments as follows:

Dec 31, 2014


Available-for-sale investment–government bond

4,420,000Repurchase


Jan 4, 2015 -Mar 11, 2015

Dec 31, 2013


Available-for-sale investment–government bond

13,604,000Repurchase


Jan 4, 2014-Jun 24, 2014

Dec 31, 2014 Dec 31, 2013

Government bond 49,088 164,460

Bond of other financial institution 1,000,000 1,000,000

Financing products, assets management plan and trusted plan 70,755,756 35,069,080

71,804,844 36,233,540

Depreciation reserves（Note V.17） (250,000) (150,000)

71,554,844 36,083,540

11. Account receivable held for investments

House and building 2014 2013

Balance at the beginning of the year 16,609 14,738

Increase of the year - -

Decrease of the year - -

Fair value adjustment (13) 1,871

Balance at the end of year 16,596 16,609

12. Investing real estate

Continuing measurement on fair value:

City where the Group is located has flourishing real estate market, which can provide market

price or other related information to the external real estate evaluators so that the fair value of

investment real estate can be appropriately evaluated.




2014 house and construction

transportation Tool

Electronic Equipment

Machinery equipment

Decoration for self-

owned house

Total

Original price:

31 Dec. 2013 2,491,233 120,158 522,036 64,852 139,916 3,338,195

Purchase 11,299 23,282 117,341 15,634 31,648 199,204

Transfer from construction in progress

996,356 - - - 2,683 999,039

Transfer from others 60,130 - - - - 60,130

Write-off (2,227) (10,667) (4,467) (693) - (18,054)

Dec 31, 2014 3,556,791 132,773 634,910 79,793 174,247 4,578,514

Accumulated depreciation:

31 Dec. 2013 479,815 78,067 248,486 35,711 99,243 941,322

Drawing 164,193 13,851 92,067 9,603 16,794 296,508

Write-off (963) (10,314) (4,232) (631) - (16,140)

Dec 31, 2014 643,045 81,604 336,321 44,683 116,037 1,221,690

Provision：

31 Dec. 2013 1,662 709 1,709 725 - 4,805

31 Dec. 2014 1,662 709 1,709 725 - 4,805

Book value：

31 Dec. 2014 2,912,084 50,460 296,880 34,385 58,210 3,352,019

31 Dec. 2013 2,009,756 41,382 271,841 28,416 40,673 2,392,068

13. Fixed assets




2013 house and construction

transportation Tool

Electronic Equipment

Machinery equipment


owned house

Total

Original price:

31 Dec. 2012 2,400,825 110,746 507,515 63,195 122,037 3,204,318

Purchase 73,667 16,049 104,775 7,422 11,252 213,165


23,547 - - - - 23,547

Transfer from others (6,806) - - - 12,073 5,267

Write-off - (6,637) (90,254) (5,765) (5,446) (108,102)

Dec 31, 2013 2,491,233 120,158 522,036 64,852 139,916 3,338,195


31 Dec. 2012 355,913 68,311 258,984 32,221 86,264 801,693

Drawing 123,902 16,136 77,894 9,083 18,326 245,341

Write-off - (6,380) (88,392) (5,593) (5,347) (105,712)

Dec 31, 2013 479,815 78,067 248,486 35,711 99,243 941,322

Provision：

31 Dec. 2012 1,662 709 1,709 725 - 4,805

31 Dec. 2013 1,662 709 1,709 725 - 4,805

Book value：

31 Dec. 2013 2,009,756 41,382 271,841 28,416 40,673 2,392,068

31 Dec. 2012 2,043,250 41,726 246,822 30,249 35,773 2,397,820

As of 31 Dec. 2014 and as of 31 Dec. 2013, the houses and buildings for which the Group applied

for property ownership certificates respectively valued at RMB201, 351million yuan and RMB 14,

901 million yuan. The management believed that no significant obstacles would affected by the

application of property ownership certificates of houses and buildings, and above issues had no

serious negative effects on the overall financial position of the Group.

As of 31 Dec. 2014 and as of 31 Dec. 2013, the original book value of fixed assets which were fully

depreciated but still used amounted to RMB 281, 414 million yuan and RMB 233, 051 million yuan.

The net book value was RMB7, 972 million yuan and RMB 6, 390 million yuan respectively.

As of 31 Dec. 2014 and as of 31 Dec. 2013, there were no temporarily idle fixed assets.




14. Intangible assets

2014 Software Land use right Membership right Total

Original price：

31 Dec. 2013 146,300 48,271 - 194,571

Increase 66,176 - 22,000 88,176

Decrease (24,197) - - (24,197)

31 Dec. 2014 188,279 48,271 22,000 258,550

Accumulated amortization：

31 Dec. 2013 38,888 8,087 - 46,975

Increase 24,272 1,208 1,650 27,130

Decrease (24,197) - - (24,197)

31 Dec. 2014 38,963 9,295 1,650 49,908

Book value：

31 Dec. 2014 149,316 38,976 20,350 208,642

31 Dec. 2013 107,412 40,184 - 147,596

2013 Software Land use right Membership right Total

Original price：

31 Dec. 2012 93,528 48,271 - 141,799

Increase 79,310 - - 79,310

Decrease (26,538) - - (26,538)

31 Dec. 2013 146,300 48,271 - 194,571

Accumulated amortization：

31 Dec. 2012 47,022 6,879 - 53,901

Increase 18,404 1,208 - 19,612

Decrease (26,538) - - (26,538)

31 Dec. 2013 38,888 8,087 - 46,975

Book value：

31 Dec. 2013 107,412 40,184 - 147,596

31 Dec. 2012 46,506 41,392 - 87,898

No depreciation of the intangible assets happened to the Group, so there is no provision for

impairment of intangible assets.




15. Deferred income tax assets/liabilities

15.1 Deferred income tax assets and deferred income tax liabilities are listed on net basis

Deferred income tax assets and deferred income tax liabilities after offsetting are listed as follows:

December 31, 2014 December 31, 2013

Deferred income tax assets 769,245 867,712

Deferred income tax liabilities (3,871) (3)

Net amount 765,374 867,709

15.2 Deferred income tax assets and liabilities before offsetting are listed as follows:

2014 Dec 31,2013

Accounted into profit or

loss

Accounted into equity

Dec 31,2014


Assets depreciation reserves 588,164 274,216 - 862,380

Changes in fair value of derivative financial liabilities 519,211 (193,939) - 325,272

Financial assets measured by fair value with changes enter into income statement 10,332 (10,332) - -

Changes in fair value of transaction financial assets 248,603 - (248,603) -

Others 9,720 (5,140) - 4,580

Subtotal 1,376,030 64,805 (248,603) 1,192,232


Fair value changes in investing real estate 2,452 - - 2,452

Changes in fair value from transaction financial assets Into investing real estate 6,516 - - 6,516

Changes in fair value of available-for-sale financial assets 3 - 96,468 96,471

Changes in fair value of derivative financial assets 481,827 (183,062) - 298,765

Financial assets measured by fair value with changes enter into income statement - 12,091 - 12,091

Fair value changes of financial liabilities in current income and loss - 3,873 - 3,873

Deferred income 9,326 (9,326) - -

Other 8,197 (1,507) - 6,690

Subtotal 508,321 (177,931) 96,468 426,858

Net value 867,709 242,736 (345,071) 765,374




16. Other assets

2013 Dec 31,2012

Accounted into profit or

loss

Accounted into equity

Dec 31,2013


Assets depreciation reserves 384,534 203,630 - 588,164

Changes in fair value of derivative financial liabilities 201,738 317,473 - 519,211

Fair value change of financial assets Measured by fair value with its changesEnter into current income statement

2,810 7,522 - 10,332

Changes in fair value of available-for-sale financial asset 3,139 - 245,464 248,603

Others 8,419 1,301 - 9,720

Subtotal 600,640 529,926 245,464 1,376,030


Changes in fair value of investment real estate 2,367 85 - 2,452

Real estate for private use turned into investment real estate 6,516 - - 6,516

Changes in fair value of available-for-sale financial assets - - 3 3

Changes in fair value of derivative financial assets 195,845 285,982 - 481,827

Deferred income - 9,326 - 9,326

Other 10,023 (1,826) - 8,197

Subtotal 214,751 293,567 3 508,321

Net value 385,889 236,359 245,461 867,709

Dec 31, 2014 Dec 31, 2013

Deferred expenses 16.1 97,283 84,856

Other receivables 16.2 294,978 282,347

Debt Assets 16.3 89,897 121,700

Long-term deferred expenses 16.4 444,688 404,272

Construction in progress 16.5 1,322,120 1,603,001

Others - 22,980

2,248,966 2,519,156




Dec 31, 2014 Within 1 year

1-2 years

2-3 years 3 years Total Proportion

Provision For bad

debts

Net value

Refundable deposits 2,763 - - 1,121 3,884 1.26% - 3,884

Settlement receivable and other liquidates

246,217 30,899 4,707 7,082 288,905 93.56% (13,816) 275,089

Deposit 4,436 3,233 2,677 5,659 16,005 5.18% - 16,005

253,416 34,132 7,384 13,862 308,794 100.00% (13,816) 294,978

Dec 31, 2013 Within 1 year

1-2 years

2-3 years 3 years Total Proportion

Provision For bad

debts

Net value

Refundable deposits - - - 1,121 1,121 0.38% - 1,121

Settlement receivable and other liquidates

238,470 31,037 2,810 4,375 276,692 93.64% (13,133) 263,559

Deposit 3,862 2,693 2,943 8,169 17,667 5.98% - 17,667

242,332 33,730 5,753 13,665 295,480 100.00% (13,133) 282,347

16.1. Deferred expenses

16.2. Other receivables

Dec 31, 2014 Dec 31, 2013

Renting 91,773 78,151

Others 5,510 6,705

97,283 84,856

The balance of the account does not involve the averages to those shareholders' companies with 5%

or over 5% shareholding of the Company till 31 December 2014(31 Dec. 2013: none).

16.3. Debt assets

31 Dec. 2014 31 Dec. 2013

Original value impairment provision Net value Original value impairment

provision Net value

Real estate 89,897 - 89,897 121,863 (163) 121,700




2014Dec 31,

2013Increase

Fiexed assets transferred

other decrease

Dec 31, 2014

Capital Source

Business occupation

1,596,497 705,160 (999,039) (918) 1,301,700 self-funded

Others 6,504 69,952 - (56,036) 20,420 self-funded

1,603,001 775,112 (999,039) (56,954) 1,322,120

2013Dec 31,

2012Increase

Fiexed assets transferred

other decrease

Dec 31, 2013

Capital Source

Business occupation

644,599 975,445 (23,547) - 1,596,497 self-funded

Others 42,895 33,358 - (69,749) 6,504 self-funded

687,494 1,008,803 (23,547) (69,749) 1,603,001

2014Supplementary

Endowment insurance

Renting

Improvements of fixed assets rent

Other Total

Dec 31, 2013 110,794 48,262 244,472 744 404,272

Increase 26,642 23,677 88,421 - 138,740

Amortize (10,767) (17,449) (69,872) (236) (98,324)

Dec 31, 2014 126,669 54,490 263,021 508 444,688

2013Supplementary

Endowment insurance

Renting

Improvements of fixed assets rent

Other Total

Dec 31, 2012 90,931 45,379 183,418 615 320,343

Increase 30,329 20,212 111,680 395 162,616

Amortize (10,466) (17,329) (50,626) (266) 78,687)

Dec 31, 2013 110,794 48,262 244,472 744 404,272

16.4. Long-term deferred expenses

16.5. Construction in progress

No costs of capitalization of interests happened in the construction in progress.

No depreciation of the construction in progress happened to the Group, so there is no provision for

impairment of construction in progress.




2014 Dec 31, 2013 Increase Decrease Dec 31, 2014

Provision for bad loans of other receivables 13,133 1,000 (317) 13,816

Provision for bad loans of due from other banks 194 - - 194

Provision for fixed assets impairment 4,805 - - 4,805

Provision for debt assets depreciation 163 - (163) -

Provision for depreciation of receivables 150,000 100,000 - 250,000

168,295 101,000 (480) 268,815

2013 Dec 31, 2012 Increase Decrease Dec 31, 2013

Provision for bad loans of other receivables 2,333 10,800 - 13,133

Provision for bad loans of due from other banks 194 - - 194

Provision for fixed assets impairment 4,805 - - 4,805

Provision for debt assets depreciation 2,063 - (1,900) 163

Provision for depreciation of receivables - 150,000 - 150,000

9,395 160,800 (1,900) 168,295

17. Allowances for Assets Impairment

18. Deposit in other banks/financial institutions

The above sheets do not include provision for loan loss; please see Note V/8.4 for detailed changes.

Dec 31, 2014 Dec 31, 2013

Bank 55,541,996 73,321,973

Other financial institutions 31,092,339 16,664,933

86,634,335 89,986,906




Dec 31, 2014 Dec 31, 2013

Nobal metal (nominal) 911,324 -

Others 360,776 -

1,272,100 -

20. Financial liabilities measured by fair value with its changes enter into current income

statement

21. Proceeds generated from repurchase agreements

22. Deposit

Classified by pledges Dec 31, 2014 Dec 31, 2013

Bond 27,597,250 29,091,549

Bill 557,882 8,048,284

28,155,132 37,139,833

Classified by counter party Dec 31, 2014 Dec 31, 2013

Bank 28,117,132 37,139,833

Other financial institution 38,000 -

28,155,132 37,139,833

Dec 31, 2014 Dec 31, 2013

Demand deposit

Company 101,144,011 91,079,084

Personal 21,696,287 17,640,425

Fixed time deposit

Company 107,436,670 81,459,864

Personal 52,509,921 43,759,022

Guarantee deposit 23,442,574 21,031,240

Other 302,366 308,692

306,531,829 255,278,327

See Note XI/3.1 for deposits from shareholders with 5% or more than 5% shareholding

19. Deposit funds

Dec 31, 2014 Dec 31, 2013

Bank 14,071,981 13,015,003




2014 Dec 31, 2013 Addition Payment Dec 31, 2014

Short-term salary：

Salary, bonus and allowance 1,018,853 2,069,323 1,989,413 1,098,763

Welfare - 115,932 115,932 -

Social insurances

Medical insurance 8 64,349 64,355 2

Work injury insurance - 3,551 3,551 -

Maternity insurance - 1,623 1,623 -

Housing fund 5 133,349 133,354 -

Labor union's funds and employee education funds - 24,948 24,948 -

Contribution plan：

Basic pension insurance 26 100,211 100,234 3

Unemployment insurance 2 10,757 10,759 -

1,018,894 2,524,043 2,444,169 1,098,768

2013 Dec 31, 2012 Addition Payment Dec 31, 2013

Short-term salary：

Salary, bonus and allowance 624,031 2,021,621 1,626,799 1,018,853

Welfare - 120,380 120,380 -

Social insurances

Medical insurance - 53,758 53,750 8

Work injury insurance - 3,000 3,000 -

Maternity insurance - 1,282 1,282 -

Housing fund - 105,570 105,565 5

Labor union's funds and employee education funds - 28,686 28,686 -

Contribution plan：

Basic pension insurance - 80,934 80,908 26

Unemployment insurance - 8,908 8,906 2

624,031 2,424,139 2,029,276 1,018,894

23. Accrued payroll




Dec 31, 2014 Dec 31, 2013

Financial bond payable 7,987,923 12,980,748

Subordinated bond payable 5,486,727 5,485,498

Deposit of other banks 37,180,741 -

50,655,391 18,466,246

24. Taxes payable

25. Interest payable

26. Bond payable

Dec 31, 2014 Dec 31, 2013

Operation tax 258,538 185,807

City maintenance and construction tax 16,019 10,390

Educational surcharges 11,008 7,256

Corporate income tax 497,663 456,738

Individual income tax 2,175 11,653

Taxes payable on behalf of entrusted loans 5,199 6,621

Others 4,532 5,441

795,134 683,906

Dec 31, 2014 Dec 31, 2013

Interest on deposit 4,007,255 2,838,291

Interest on repurchase financial assets 111,278 206,089

Interest on inter-bank deposit and borrowings 818,440 683,045

Interest on bond 310,366 407,189

Interest on rate exchange 156,440 52,645

Interest on structural deposit 93,562 107,155

Other interest payable 90,286 165,631

5,587,627 4,460,045




Balance of bond payables to the date 31 December 2014 is as follows：

Date of issue

Bond period

Book value

Dec 31, 2013

Issued in 2014

2014 Accrued interest

Premium discount Amortize

Repayment Dec 31, 2014

09 Financial bond 6/25/2009 5 years 5,000,000 4,994,825 - 98,354 5,175 (5,000,000) -

10 Subordinated 11/10/2010 10

years 2,500,000 2,492,112 - 135,677 927 - 2,493,039


years 3,000,000 2,993,386 - 172,802 302 - 2,993,688

13 Financial bond 4/16/2013 5 years 5,000,000 4,991,509 - 154,314 1,586 - 4,993,095

13 Financial bond 4/16/2013 10

years 3,000,000 2,994,414 - 236,586 414 - 2,994,828

Balance of bond payables to the date 31 December 2013 is as follows:

Date of issue

Bond period

Book value

Dec 31, 2012

Issued in 2013

2013 Accrued interest

Premium discount Amortize

Repayment Dec 31, 2013

09 Financial bond 6/25/2009 5 years 5,000,000 4,989,817 - 201,137 5,008 - 4,994,825


years 2,500,000 2,491,233 - 135,629 879 - 2,492,112


years 3,000,000 2,993,100 - 172,786 286 - 2,993,386

13 Financial bond 4/16/2013 5 years 5,000,000 - 5,000,000 108,261 (8,491) - 4,991,509

13 Financial bond 4/16/2013 10

years 3,000,000 - 3,000,000 166,056 (5,586) - 2,994,414

On 16 April 2013, the Company issued the term financial bonds at the par value of RMB 8 billion

yuan in the national inter-bank bond market, including: type 1 is the five-year bonds of fixed interest

rate, RMB 5 billion yuan, coupon rate 4.70%; type 2 is the ten-year bonds of fixed interest rate,

RMB 3 billion yuan, coupon rate 5.13%. These two bonds need to pay interest annually and repay

the principal at the time of maturity without guarantee.

On 22 November 2012, the Company issued 15-year term subordinated bonds at the par value

of RMB 3 billion yuan in the national inter-bank bond market. The Company has the right of

redemption of these subordinated bonds at the end of the 10th year of interest accrual. The




27. Other liabilities

Dec 31, 2014 Dec 31, 2013

Liabilities from intermediary service 27.1 21,027,698 12,561,244

Agency of securities payable 27.2 88 70,947

Dividend payable 27.3 23,811 23,811

Other payables 27.4 1,867,837 315,919

Other current liabilities 27.5 889,820 1,250,500

23,809,254 14,222,421

annual interest rate for these subordinated bonds is 5.75%. While interest need to pay annually and

principal repayment at the time of maturity all at once.

On 10 November 2010, the Company issued 10-year term subordinated bonds at the par value

of RMB 2.5 billion yuan in the national inter-bank bond market. The Company has the right of

redemption of these subordinated bonds at the end of the 5th year of interest accrual. The annual

interest rate for these subordinated bonds is 5.39%. While interest need to pay annually, the

principal repayment at the time of maturity all at once.

27.1 Liabilities from intermediary service

Dec 31, 2014 Dec 31, 2013

Consignment deposit 2,480 5,125

Consignment finance 21,025,218 12,556,119

21,027,698 12,561,244

27.2 Agency of securities payable

Dec 31, 2014 Dec 31, 2013

Agency of bond 88 70,947




27.3 Dividend payable

27.4 Other payables

Dec 31, 2014 Dec 31, 2013

Dividend of shareholders (note) 23,811 23,811

Dec 31, 2014 Dec 31, 2013

Bills to be payment 308 10,284

Amount to be transfered 334,900 121,109

Payment by installments 21,021 51,850

Unclaimed deposit account 21,513 21,117

Security deposit 6,787 4,898

Unpaid of construction 52,282 42,853

Security assets to be transferred 1,361,794 -

Others 69,232 63,808

1,867,837 315,919

Note：Dividend of shareholder is not paid because the shareholder of the non-tradable share has not come to draw it yet.

The balance of the account does not involve the arrearages to those shareholders' companies or

affiliated parties with 5% or over 5% shareholding of the Group to the date 31 December 2014(31

Dec. 2013: none).

27.5 Other current liabilities

Dec 31, 2014 Dec 31, 2013

Account payable to Unionpay 185,206 105,562

Public finance funds to be settled 12,186 13,323

Balance of financing assets 614,649 678,267

E-payment settlement 44,264 364,800

Others 33,515 88,548

889,820 1,250,500




28. Share capital

2014

Dec 31,2013 Change Dec 31,2014

Amount Prop% newly issued Desterilization Amount Prop%

I.Shares subject to restriction on sale

1.State-owned shares - 0.00% - - - 0.00%

2.Shares held by state-owned legal persons - 0.00% - - - 0.00%

3.Shares held by other domestic investors - 0.00% 158,462 - 158,462 4.88%

Amongst: shares held by domestic legal persons - 0.00% 158,462 - 158,462 4.88%

4.Shares held by foreign investors - 0.00% 207,546 - 207,546 6.39%

Amongst: shares held by overseas legal persons - 0.00% 207,546 - 207,546 6.39%

5.Shares held by senior management 12,542 0.43% - (1,238) 11,304 0.35%

Total of shares subject to restriction on sales 12,542 0.43% 366,008 (1,238) 377,312 11.62%

II.Shares not subject to restriction on sales

RMB-denominated ordinary shares 2,871,279 99.57% - 1,238 2,872,517 88.38%

Total of shares not subject to restriction on sales

2,871,279 99.57% - 1,238 2,872,517 88.38%

III.Total shares 2,883,821 100.00% 366,008 - 3,249,829 100.00%

The increase of share capital this year is a result of the non-public issuing of 366, 007, 872 new

shares on Sep, 2014. The capital increase was verified by Ernst & Young Public Accountants, with

the capital verification report (2014) No. 60466992_B02 being issued.




2013

Dec 31,2012 Change Dec 31,2013

Amount Prop% newly issued Desterilization Amount Prop%

I.Shares subject to restriction on sale

1.State-owned shares - 0.00% - - - 0.00%

2.Shares held by state-owned legal persons 26,000 0.90% - (26,000) - 0.00%

3.Shares held by other domestic investors 211,500 7.34% - (211,500) - 0.00%

Amongst: shares held by domestic legal persons 211,500 7.34% - (211,500) - 0.00%

4.Shares held by foreign investors 146,321 5.07% - (146,321) - 0.00%

Amongst: shares held by overseas legal persons 146,321 5.07% - (146,321) - 0.00%

5.Shares held by senior management 15,642 0.54% - (3,100) 12,542 0.43%

Total of shares subject to restriction on sales 399,463 13.85% - (386,921) 12,542 0.43%

II.Shares not subject to restriction on sales

RMB-denominated ordinary shares 2,484,358 86.15% - 386,921 2,871,279 99.57%

Total of shares not subject to restriction on sales

2,484,358 86.15% - 386,921 2,871,279 99.57%

III.Total shares 2,883,821 100.00% - - 2,883,821 100.00%

29. Capital reserve

2014 Dec 31, 2013 Change Dec 31, 2014

Capital premium 7,889,125 2,710,504 10,599,629

Others (note) - (1,428) (1,428)

7,889,125 2,709,076 10,598,201

Note：due to capital increase of subsidiary, capital reserves changed.




2013 Dec 31, 2012 Change Dec 31, 2013

Capital premium 7,889,125 - 7,889,125

2014 Amount before tax income tax

Amount after tax

Other comprehensive income to be enter into income statement after reclassfied

Fair value change of financial assets available for sale 1,389,616 (347,404) 1,042,212

Less: income and losses transferred from the other comprehensive income 9,107 (2,277) 6,830

1,380,509 (345,127) 1,035,382

2013 Amount before tax income tax

Amount after tax

Other comprehensive income to be enter into income statement after reclassfied

Fair value change of financial assets available for sale (985,284) 246,321 (738,963)

Less: income and losses transferred from the other comprehensive income (3,440) 860 (2,580)

(981,844) 245,461 (736,383)

30. Other comprehensive income

Balance of other comprehensive income in the balance sheet belonged to the mother company:

Other comprehensive income in the consolidated comprehensive income statement belonged to the

mother company:

Jan 1, 2013

ChangeDec 31,

2013 Change

Dec 31, 2014

Change of fair value of financial assets available for sale

(9,418) (736,383) (745,801) 1,035,382 289,581

Investment real estate transferred from self-owned real estate On fair value mode

19,549 - 19,549 - 19,549

10,131 (736,383) (726,252) 1,035,382 309,130




31. Surplus reserve

2014 Dec 31, 2013 Provision for this year Dec 31, 2014

Statutory surplus reserve 1,970,844 561,113 2,531,957


Statutory surplus reserve 1,486,303 484,541 1,970,844

The Group appropriated 10% of the net profit for the year of 2014 to the statutory surplus

reserve as stipulated by Corporate Law and regulations of the Group. The accumulated statutory

surplus reserve that more than 50% of the registered capital of the Group can not be relieved from

provisions.


Provision for general risks 2,859,911 1,194,808 4,054,719


Provision for general risks 1,499,934 1,359,977 2,859,911

32. Provision for general risks

According to the C.J. [2012] No. 20 on Management Methods of Provisions of Financial Enterprise

and on the basis of assets impairment provision, the Group set up provision for general risk in

order to avoid the possible risks have not yet been identified. The provision for general risk will be

treated as the profit distribution, and is a part of the owner's equity. It shall be at least 1.5% of the

risk assets balance, and can be separated into a maximum of 5 years.

According to Resolution of 2013 Shareholders' General Meeting on Apr 24 2014, the Group

accrued general provision of RMB 1,194,715 from undistributed profit of the year 2013. The

subsidiaries accured RMB 93,000 as the 2014 provision for general risk (2013: none).

33. Undistributed profit

Dec 31, 2014 Dec 31, 2013

Undistributed profit at the end of 2013 10,629,244 8,347,646

Net profit belongs to the mother company 5,627,466 4,847,071

Less: Provision for accumulated statutory surplus reserve 561,113 484,541

Provision for general risks 1,194,808 1,359,977

Cash dividend payable for Ordinary shares 1,153,528 720,955

13,347,261 10,629,244




See Note XIII for the predetermined 2014 distribution plan. The financial statement of the year

2014 has not included the distribution items other than the 10% statutory welfare reserve of the

year.

On Apr 24, 2014, the meeting of the Board of Directors of the Company has passed the resolution:

to distribute 10% of 2013 net profit as the statutory surplus reserve and withdraw the amount of

RMB 1,194,715 as general provision. And based on the total 2.88 billion shares at the end of the

year, the payment of cash dividend is RMB 4 (including tax) per 10 shares. This distribution decision

has passed on the general meeting of shareholders on May 16, 2014.

On Apr 22, 2013, the meeting of the Board of Directors of the Company has passed the resolution:

to distribute 10% of 2012 net profit as the statutory surplus reserve and withdraw the amount of

RMB 1,359,977.000 as general provision. And based on the total 2.88 billion shares at the end of

the year, the payment of cash dividend is RMB 2.5 (including tax) per 10 shares. This distribution

decision has passed on the general meeting of shareholders on May 16. 2013.


2014 2013

Interest income

Loans and advances 13,333,909 12,927,921

Including: Corporate loans and advances 8,162,235 7,699,750

Personal loans and advances 3,744,204 2,769,882

Notes and bills discounts 1,189,327 2,297,100

Trade financing 238,143 161,189


Balance with central banks 845,182 743,797

Placements to other financial institutions 198,402 125,860

Reserve repurchase agreement 2,015,193 1,664,345

Bond investment 2,408,434 1,612,970

Including: financial assets held for trading 181,288 120,094

Financing product and credit plan 7,927,085 5,282,008

Others 390 122

28,175,470 23,494,890




Interest expenses

Due to other banks (4,517,578) (2,222,147)

Placements from other institutions (638,900) (342,406)

Deposit (6,350,864) (5,219,738)

Repurchase agreements financial assets (1,401,053) (3,215,483)

Bond issuance (1,105,464) (783,869)

Others (806,930) (452,558)

(14,820,789) (12,236,201)

Net interest income 13,354,681 11,258,689

2014 2013

2014 2013

Fee and commission incomes

Settlement and clearing expenses 205,201 172,575

Bank cards 1,234,438 624,675

Intermediary commissions 884,628 762,751

Guarantees 123,075 77,081

Intermediary acceptances 57,874 54,333

Trusting business 119,658 35,658

Intermediary consultations 11,938 56,417

Others 59,837 12,338

2,696,649 1,795,828

Fee and commission expenses

Settlement and clearing expenses (45,317) (35,561)

Bank cards (78,050) (70,686)

Intermediary commissions (3,270) (2,303)

Transaction (52,757) (43,482)

Entrust (25,137) (15,492)

Others (7,075) (8,968)

(211,606) (176,492)

Net fee and commission income 2,485,043 1,619,336

35. Net fee and commission income




36. Investment gains

2014 2013

Differences of financial assets investments 129,325 (76,539)

Gains from equity investment 8,937 400

Realized gains and losses from interests exchange (3,436) 196,938

Gains and losses on nobel metal 30,115 -

164,941 120,799

Other operating incomes 2014 2013

Rent income 32,994 31,193

Others 546 22

33,540 31,215

Other operating expenses 2014 2013

Losses on asset backed securitization (17,494) -

Other (20) (1,457)

(17,514) (1,457)

2014 2013

Fair value change of financial instrument measured by fair value and entered into the current income statement

105,184 (30,088)

Fair value changes on investment real estate (13) 1,871

Fair value changes on derivative instrument 43,509 (125,965)

148,680 (154,182)

37. Gains from fair value changes

38. Other operating incomes/expenses

In the year 2014, the bank deals with no investment property (In the year 2013, the bank dealed

with no investment property)




39. Business tax and surcharges

2014 2013

Business Tax 774,453 688,840

City Maintenance and Construction Tax 53,502 47,776

Educational surcharges 38,837 34,654

Other taxes 34 1

866,826 771,271

40. General and administrative expenses

2014 2013

Staff costs 2,524,043 2,424,139

Business expenses 1,938,442 1,645,218

Depreciation of fixed assets 296,508 245,341

Amortization of long-term deferred expense 98,324 78,687

Amortization of intangible assets 27,130 19,612

Taxes 40,236 35,671

4,924,683 4,448,668

41. Allowance for impairment losses

2014 2013

Allowance for loan impairment 2,420,150 1,319,252

Losses on investment of receivables 100,000 150,000

Bad debts provision 1,000 10,800

2,521,150 1,480,052

42. Non-operating incomes

2014 2013 Enter into 2014 Non-recurrent Gains and losses

Gains from the disposal of fixed assets 2,448 172 2,448

Reward funds 8,728 22,074 8,728

Others 8,973 10,737 8,973

20,149 32,983 20,149




43. Non-operating expenses

44. Income tax

2014 2013 Enter into 2014 Non-recurrent Gains and losses

Loss from the disposal of fixed assets and Mortgage assets 2,348 20,635 2,348

Donation and sponsorship 13,113 8,852 13,113

Including: charitable donation expenses 12,197 8,619 12,197

Penalty and overdue fine 11,119 544 11,119

Water conservancy fund 5,806 6,581 5,806

Other 7,448 5,023 7,448

39,834 41,635 39,834

2014 2013

Income tax 1,615,498 1,440,473

Deferred income tax (242,736) (236,359)

1,372,762 1,204,114

2014 2013

Total profits 7,006,892 6,051,379

Tax rate 25% 25%

Tax amount at statutory tax rate 1,751,723 1,512,845

Adjustment of current tax items 4,456 -

Tax-free income (444,953) (337,452)

Non-deductible costs 61,401 28,721

Effect on deferred income tax by Unconfirmed redeemable losses 135 -

1,372,762 1,204,114

Relationship between income tax and accounting profits as follows:




45. Earnings per share

Ordinary shareholders' net profit of the current period divided by the weighted average of the

outstanding common stock equal to basic earnings per share.

The Company has no dilutive potential ordinary shares.

Basic earnings per share as follows:

2014 2013

Current net profit of the ordinary shareholders of the Company 5,627,466 4,847,071

Weighted average of issuing ordinary shares of the Company 2,975,323 2,883,821

Earning per share (RMB) 1.89 1.68

46. Cash and cash equivalents

2014 2013

Cash 21,312,231 19,126,324

Including: Cash 1,568,875 1,144,648

Curren t deposit in other banks 3,815,055 3,106,050

Payable balances with central banks 15,928,301 14,875,626

Cash equivalent 24,357,786 33,085,058

Including: Due from other banks maturedn within 3 months 7,060,100 20,948,400

Placements with other institutions due within 3 months 288,686 -

Reserve repurchase securities due within 3 months 17,009,000 12,136,658

Balance of cash and cash equivalents At the end of that year 45,670,017 52,211,382

47. Other cash receivable relating to operating activities

2014 2013

Pending settlement paid 197,328 169,743

Rent income 32,994 31,193

Other income 11,701 72,933

242,023 273,869




48. Cash paid to other operating related activities

49. Operating activities cash flow

2014 2013

Pending settlement paid 532,107 -

Advertising 117,637 168,924

Business expenses 277,127 227,240

Administration expenses 1,414,030 1,010,703

2,340,901 1,406,867

2014 2013

Net profit adjusted to operating activities cash flow

Net profit 5,634,130 4,847,265

Add: Loss for fixed assets impairment 2,521,150 1,480,052



Amortization of deferred expenses 297,828 264,531

(Gains) from disposal of fixed assets, intangible assets and other long-term assets (100) 14,563

Loss (gains) of fair valve adjustment (148,680) 154,182

Investment gains (164,941) (120,799)

Increase of deferred income tax assets (98,467） (236,359)

Increase of deferred income tax liabilities 3,868 -

Increase of operating receivable (25,427,010) (46,906,018)

Increase of operating payable 39,834,881 78,974,749

22,776,297 38,737,119




Maxwealth Assets Management Co., Ltd is a wholly-owned limited liability company authorized by China Securities Regulatory Commission [2014], approved by Reply on Establishment of Subsidiary Corporation by Maxwealth Fund Management Co., Ltd, No. 306, and funded and established by the subsidiary corporation of the Company, Maxwealth Fund on March 28, 2014.

In August of 2014, the subsidiary Maxwealth Fund increased its registered capital by RMB 50 million Yuan, but our company did not increase the investment at same proportion. Consequently our shareholding ratio in Maxwealth Fund fell from 90% to 67.5%.

Neither of the above-mentioned subsidiaries is listed, so they are both included into the consolidated statements of the company.

In accordance with the enterprise accounting principles, it is required to disclose all the financial information abstracts of the subsidiary with material non-controlling interests. The company evaluates the non-controlling interests of each subsidiary and comes to the conclusion that neither of them has material non-controlling interests with our group. Thus we do not think it is necessary to disclose their financial information abstracts.

Note:

Note:

VI. Change of Consolidation Scope

Subsidiary Corporations Established or Invested

Company nameBusiness address

registered add

Business scope

Registered capital（rmb）

indirect holding ratio

voting right ratio

Maxwealth Assets Management Co., Ltd (note)

Shanghai Banking 50 million 67.5% 67.5%

VII. Interests in other entities

1. Interests in the subsidiary

The subsidiaries of the company are as follows:

Subsidiary obtained through establishment

Major operation

site

Place of registry

Business nature

Registered capital (RMB)

Shareholding ratio

Direct Indirect

Maxwealth Fund Management Co., Ltd (note)

Shanghai ZhejiangFund

management0.2 billion

Yuan67.5% -

Maxwealth Assets Management Co., Ltd

Shanghai ShanghaiAssets

management50 million

Yuan- 67.5%




2. Interests in the structured entities included into the consolidation scope

The structural entities included into the consolidation scope are dominated by some financial

products. The group, as the financial products administrator, could be the main responsibility

person or agent for those products. It depends on such factors control or not on such structured

entities by the group or the administrator, the decision-making scope of the group as the assets

administrator, financial products owner's power, remuneration from the management service, and

the variable income risk exposure. As for the capital preservation financial products provided by the

group, though the group holds no equity in them, it still has the obligation to undertake the loss as

per related financial products guarantee agreement when they suffer loss. Thus such products are

also to be included into the consolidation scope.

By Dec. 31, 2014 the financial products managed and consolidated by the group amount to RMB

21,025,218,000 Yuan. The effect of single financial product on the group finance is insignificant.

The rights and interests of the financial products investor are listed in other liabilities.

3. Interests in the structured entities not included into the consolidated financial statement

scope

The structured entities managed by the group but not included into the consolidated scope

Financial products

The structured entities managed by the group but not included into the consolidated scope are

mainly the financial products issued and managed by the group as the administrator. On the basis

of potential customer group analysis and study, the group designs and sells capital investment

and management plan to target customer groups, inputs the collected financial capital into related

financial market or financial products as agreed in the contract, distributes the harvested interests

to the investors as agreed. As the assets administrator, the group obtains the commission including

sales fee, fixed management fee, and floating management fee. The group deems the variable

return on those structured entities non-significant.

By Dec. 31, 2014 the financial products issued and managed but not included into the consolidation

scope by the group amount to RMB 90,330,066,000 Yuan.

Asset securitization business

Another type of structured entity managed by the group but not included into the consolidation

scope is the trust of specific objective set by third trust company due to the group's asset

securitization business. The trust of specific objective purchases credit assets from our group, and

issues assets backed security on the basis of the cash generated by the credit assets to realize




financing. The group, as the loan service mechanism for this kind of trust with specific objective,

manages the credits assets of transferred trust with specific objective, and charges corresponding

commission as the loan assets administrator. This group also hold some special purpose trust asset-

backed securities at all levels. But the group believes its variable return on such kind of structured

entities is non-significant. By Dec. 31, 2014, all levels of assets backed securities issued by the

specific objective trust with max loss risk exposure not included into the consolidation scope by the

group amounts to RMB 209,565,000 Yuan.

By Dec. 31, 2014, the total trust of specific objective not included into the consolidation scope with

the group as the loan assets administrator amounts to RMB 4,191,274,000 Yuan.

In the year of 2014, the group provides no financial support to the specific objective trust that not

included into the consolidation scope.

In order to better use the capital to gain income, the structured entities invested by the group

but not included into the consolidation group mainly include financial products, capital trust plan,

and assets management plan issued and managed by third party. The group provides no liquidity

support for such structured entities in 2014.

By Dec. 31, 2014, the book value and max loss risk exposure of the assets formed from the

structured entities not included into the consolidations scope but held by the group are as follows:

2014 Receivablesinvestment Due investment Financial assets

available for sales In total

Financial products 51,842,192 - 70,971,029 122,813,221

Trust plan 11,321,281 - 249,652 11,570,933

Assets management plan 7,592,283 - - 7,592,283

Assets backed security - 209,565 - 209,565

The group gains interest income and commission income by holding the investment or providing

service for the structured entities.




Dec 31, 2014 Dec 31, 2013

Core tire-I assets

including: part of paid-in capital entered 3,249,829 2,883,821

part of capital reserve entered 10,907,331 7,162,873

surplus reserve 2,531,957 1,970,844

general risk reserve 4,054,719 2,859,911

undistributed profit 13,347,261 10,629,244

part of minority equity entered 73,115 15,195

Less: other intangible assets (excluding right to use land) (169,666) (107,412)

Core tier-I capital investment on financial institutions which are controlled but whose statements are not consolidated

- -

Net value of core tier-I capital 33,994,546 25,414,476

VIII. Capital management

The Group adopts a capital management method that is able to prevent inherent risks of the

operating business of the Company in compliance with the relative requirements of the regulatory

authority. The capital management is not only to meet the requirements of the regulatory authority

but also to guarantee a capital adequacy ratio and a maximum shareholders' equity. Depending on

the economical environment changes and risks confronted with, the Company would actively adjust

the capital structure including regulating the dividend distribution, transferring capitals and issuing

new bonds. The targets and methods of the capital management are the same as the previous year.

Since 2013, the bank disclosure and improve continually the information related to capital adequacy

ratio according to "Notice of the China Banking Regulatory Commission on Issues concerning

Transitional Arrangements for the Implementation of the Administrative Measures for the Capital

of Commercial Banks (for Trial Implementation)". As required by CBRC, before 2018, for the non-

systemically important Banks' the core tier-I capital adequacy ratio shall be no lower than 7.5

percent, the tier-I capital adequacy ratio no lower than 8.5 percent, and the capital adequacy ratio

no lower than 10.5 percent. During the reporting period, the group has complied with the regulatory

capital requirements.

The Group calculated the core capital and subordinate capital in compliance with Measures for

Management of Adequacy Ratio of Commercial Banks issued by CBRC. The related core tire-I

capital adequacy, tire-I capital adequacy ratio and capital adequacy ration are as follows:




Tier-II capital

Including: tier-II capital tools and premium 4,400,000 4,959,170

provision for jumbo loan loss 3,449,474 2,362,275

part of minority equity entered - -

Net capital value 41,844,020 32,735,921

Risk weighted capital 337,552,562 271,379,933

Core tier-I capital adequacy ratio 10.07% 9.36%

Tier-I capital adequacy ratio 10.07% 9.36%

Capital adequacy ratio 12.40% 12.06%

Dec 31, 2014 Dec 31, 2013

IX. Segment Reporting

The Group has four reporting business segments in compliance with the product and service units

for the purpose of management as follows:

(1) Corporate banking involves services provided specifically for companies, including deposits,

loans, settlements, products in relation to commercial transactions and other services.

(2) Personal banking refers to personal banking services, such as deposits, credit card and debit

card businesses, consumer credit services, mortgage loans and private property management.

(3) Capital banking services include deposit and placement services in other banks, sell-back and

repurchase services, investment business, foreign currency transactions, self-operating and agency

services.

(4) Other banking services are those segments not forming a single reporting other than the

corporate, personal and capital banking services, or the assets, liabilities, incomes and costs failed

to be properly distributed.

The internal transfer price is determined on the basis of deposit/loan interest rate and inter-bank

offered rate declared by PBC corresponding to different fund sources and application terms.

Expenses are allocated in different segments subject to benefit.




2014 Corporate banking

Personal banking

Capital banking Others Total

Net external interest income

4,294,951 1,877,664 7,182,066 - 13,354,681

Net internal interest income

2,362,392 510,396 (2,872,788) - -


1,299,059 1,152,404 33,580 - 2,485,043

Investment gains - - 156,004 8,937 164,941

Gains from fair value adjustment

- - 148,693 (13) 148,680

Foreign exchange gains

168,512 - (1,029,904) 31,257 (830,135)

Other operating income/expense

- - - 16,026 16,026

Operating tax and surcharge

524,141 275,944 66,069 672 866,826

Business and management fees

2,235,708 1,182,300 1,503,796 2,879 4,924,683

Assets impairment loss

2,003,016 418,134 100,000 - 2,521,150


Non-operating net balance

- - 5,964 (25,649) (19,685)

Total profits 3,362,049 1,664,086 1,953,750 27,007 7,006,892

Total assets 134,890,347 73,248,241 345,216,856 757,174 554,112,618


Supplementary information:



284,662 149,866 186,573 365 621,466




2013 Corporate banking

Personal banking

Capital banking Others Total

Net external interest income

4,858,210 1,317,310 5,083,169 - 11,258,689

Net internal interest income

1,458,916 367,064 (1,825,980) - -


1,079,056 583,734 (43,454) - 1,619,336

Investment gains - - 120,799 - 120,799

Gains from fair value adjustment

- - (154,182) - (154,182)

Foreign exchange gains

138,119 - (252,497) - (114,378)

Other operating income/expense

- - - 29,758 29,758

Operating tax and surcharge

545,997 171,432 53,842 - 771,271

Business and management fees

2,505,438 789,796 1,153,434 - 4,448,668

Assets impairment loss

1,236,265 93,787 150,000 - 1,480,052


Non-operating net balance

- - 6,000 (14,652) (8,652)

Total profits 3,246,601 1,213,093 1,576,579 15,106 6,051,379

Total assets 116,377,028 53,825,872 291,271,872 713,257 462,188,029


Supplementary information:



371,838 125,193 32,438 15 529,484




X. Correlative Parties Relationships and Transactions

1. Designation of correlative parties

Correlative parties:

1) Shareholders with 5% or more than 5% shareholding

Name

Dec 31,2014 Dec 31, 2013

Share number (10,000) Prop Share number

(10,000) Prop

OCBC 60,387 18.58% 39,632 13.74%

Ningbo Development & Investment Group Co., Ltd. 42,846 13.18% 27,000 9.36%

Ningbo Youngor (Group) Co., Ltd 35,518 10.93% 29,135 10.10%

Nngbo Power Development Company 22,150 6.82% 22,150 7.68%

Ningbo Huamao Group Co., Ltd. 20,000 6.15% 24,000 8.32%

Ningbo Shanshan Co., Ltd. 16,345 5.03% 17,900 6.21%

Ningbo Fubang (Holding) Group Co., Ltd. 14,674 4.52% 20,130 6.98%

2) Key managers of the Company or their relative family members

2. Transactions between the Company and the correlative parties

2.1 Transactions with shareholders with 5% or more than 5% shareholding

1) Loan interest income

Name 2014 2013

Ningbo Development & Investment Group Co., Ltd 6,490 4,600

Ningbo Youngor (Group) Co., Ltd 17 -

Nngbo Power Development Company - 62

Ningbo Huamao Group Co., Ltd. 24,938 21,108

Ningbo Shanshan Co., Ltd. 1,509 3,057

Ningbo Fubang (Holding) Group Co., Ltd. 38,862 33,922

71,816 62,749




2) Deposit interest expenses

3) Interests expenses of capital business

4) Interests income of capital business

Name 2014 2013

Ningbo Development & Investment Group Co., Ltd 898 462

Ningbo Youngor (Group) Co., Ltd 2,169 15

Nngbo Power Development Company 39 307

Ningbo Huamao Group Co., Ltd. 595 777

Ningbo Shanshan Co., Ltd. 260 134

Ningbo Fubang (Holding) Group Co., Ltd. 150 88

4,111 1,783

Name 2014 2013

OCBC - 10,711

Name 2014 2013

OCBC 4,994 -

2.2 Transactions with the key managers and their relative family members

2.3 Other correlative parties transactions

Name 2014 2013

Loan interest income 1,263 1,203

Deposit interest expense 375 223

Name 2014 2013

Remuneration of key managers 37,761 38,321

The Management of the Group thought the transactions with above-mentioned correlative parties

have been proceeded in compliance with the regular business transaction items and conditions and

the normal business procedures with the general market price as the pricing fundamentals.




2) Deposit

Name Dec 31, 2014 Dec 31, 2013





1,127,222 1,190,400

Name Dec 31, 2014 Dec 31, 2013



Ningbo Youngor (Group) Co., Ltd 455,015 400


Nngbo Power Development Company 57,243 50,365


1,053,935 858,873

3. Balance of correlative parties transactions

3.1 Balance of transactions from shareholders who own 5% or more than 5% share

1) Loan and advance

3) Borrowing

4) Repurchased financial assets

Name Dec 31, 2014 Dec 31, 2013

OCBC - 120,000

Name Dec 31, 2014 Dec 31, 2013

OCBC - 510,000




5) Resale of financial assets

6) Deposit in other financial institutions

7) Off-balance items

Name Dec 31, 2014 Dec 31, 2013

OCBC 49,000 -

Name Dec 31, 2014 Dec 31, 2013

OCBC 36,473 1,890

Name Dec 31, 2014 Dec 31, 2013

Ningbo Development & Investment Group Co., Ltd 464 -

Ningbo Shanshan Co., Ltd. - 306,310

Ningbo Youngor (Group) Co., Ltd 1,763,704 2,188,848


Nngbo Power Development Company - 69,901


2,448,263 3,070,533

8) Derivative transaction

On 31st Dec. 2014, the balance of long-term foreign exchange trading of the group and its

affiliated party OCBC was RMB 3,153,323,000, and the balance of long-term instalment was RMB

3,181,214,000 (31st Dec. 2013: RMB 342,063,000); the nominal balance of interest rate swap

is RMB 1,470,850,000,(31st Dec. 2013: RMB 9,087,808,000); the nominal balance of structural

products was RMB 1,246,000 (31st Dec. 2013: 68,272,000); the principal of Exchange rate options

purchase was RMB 1,240,000, and the principal of Exchange rate options selling was RMB 1,240,000

(31st Dec. 2013: 0)

3.2 Balance of transactions from key managers and their relative family members

Name Dec 31, 2014 Dec 31, 2013

Loans and advances 21,339 19,307

Deposit 33,108 42,185




treasury acceptance commitment

Treasury Bill Redemption Commitment and Savings Bond Redemption Commitment refer to that the Company is entrusted by the Ministry of Finance to issue certain treasury bills and savings bonds (electronic). Investors of treasury bills and savings bonds have a right to ask for redemption of the bills and bonds (electronic) at any time prior to maturity and the Company is committed to redeem those bills and bonds. The redemption price is principal value of the bills and bonds plus the interests payable at that day. Until 31 Dec. 2014, the principal value of the bills and bonds (electronic) issued by the Group but not yet at maturity and redeemed is RMB 156,578,000 (31 Dec. 2013 RMB 427,189,000). The Ministry of Finance is not to redeem the principal and interest of the bills and bonds (electronic) until the maturity. The Management of the Company considers that the amount for redemption of the treasury bills and savings bonds (electronic) prior to the maturity is not large.

Note:

XI. Contingent Items, Commitment Items and Main Off-balance Sheet Items

1. Capitalized commitment

Dec 31, 2014 Dec 31, 2013

L/C issuance 15,629,215 24,015,051

Bank acceptance bill 50,545,875 40,924,641

Issuance of guarantee 13,480,670 8,074,604

Loan commitment 52,232,448 31,404,156

Dec 31, 2014 Dec 31, 2013

Contracts signed but proceeds not yet be withdrawn 393,977 541,402

2. Operating lease commitment

3. Off-balance sheet items

According to the lease contract, the minimum lease rent of irrevocable operating sites are as

follows:

Dec 31, 2014 Dec 31, 2013

Within 1 year (included) 279,575 249,168

1-2 years (included) 267,897 238,464

2-3 years (included) 249,021 226,256

Over 3 years 801,241 767,634

1,597,734 1,481,522




Letter of Credit issued refers to the Group acting at the request and on the instruction of customer,

to make a payment to the beneficiary and pay bills of exchange drawn by the beneficiary within a

certain year provided required documents are submitted and the terms of credit are complied with.

Bank Acceptance Bill refers to a draft or a bill of exchange draws upon a payee or a drawee

(applicant) and accepted by the Company.

Letter of Guarantee is a written undertaking made by the Group at the request of the applicant to

the beneficiary, guaranteeing that the applicant will perform obligations under the contract signed

between the applicant and the beneficiary, or the Company will take the responsibility.

Loan Guarantee is a commitment made by the Group guarantees to the customers to offer certain

amount loan in a certain period.

4. Pending litigation

By the end of Dec 31, 2014, there're 8 litigations in which the Group acted as defendant, with the

total subject amounted to RMB 5,524,000. As the compensation is tiny in possibility, the liabilities

needn't to be confirmed. (By the end of Dec 31, 2013, there're 6 litigations in which the Group

acted as defendant, with the total subject amounted to RMB 5,018,000. As the compensation is tiny

in possibility, the liabilities needn't to be confirmed.

XII. Financial Instruments and Risk Analysis

According to the disclosure requirements stipulated in Accounting Standards for Enterprises

No.37–Presentation of Financial Instruments, the Group discloses the relative quantitative

information of credit risk, liquidity risk and market risk in the year 2013 and 2012.

The financial risk management is mainly about the risks taken by the Group and its management

and controlling conditions of the risks, especially the risks confronted in the using of the financial

instruments.

Credit risk: it means the risks the Company may suffer from when the clients or transaction

counter-parties of the Company fail to fulfill their obligations agreed, including the credit exposure

and settlement risk.

Market risk: it means the exposures influenced by the observable economic parameters of

the market, including the fluctuations of interest rate, exchange rate and prices of shares and

commodities.

Liquidity risk: it means the risks brought by the Company's failure to pay the matured debts under

normal or depressed market environment.




Operational risk: it means the economical or credit losses for not being in compliance with the

systems and procedures or for the fraudulences.

The Group has stipulated corresponding policies and procedures for recognition and analysis of

above mentioned risks, and also appropriate risk limits and controlling mechanisms. The Group is

equipped with Risk Management Committee and has its specific department, the risk management

department being responsible for the management of risks. The risk management department has

its own clear responsibilities and is somehow independent from the business department bearing

risks, and would submit its independent risk reports to the Board of Directors and the Management.

The Risk Management Committee is responsible for formulating the policies and procedures for

management of the risks, and also regulating the risk limits and management mechanisms. Besides,

the Risk Management Committee shall at regular intervals host risk management conferences and

meetings in compliance with the market conditions to improve those risk policies and procedures.

1. Credit risk

Credit risk means that clients or transaction counter-parties who may be incapable or unwilling to

honor the obligations agreed with the Group. Once all of the transaction-parties are in a single trade

or area, the credit risks would rise for their ability to pay the accounts are affected by the same

economical development.

Concentration of credit risks: when a certain amount of clients do the same operations or are in the

same geographic area, or share the similar economic features in their trades, their ability to fulfill

the obligations regulated in the agreements would be mutually influenced by the same economic

changes. The concentration degree of the credit risks reveals the sensitivity of the Company's

achievements to the specific trade or geographic area.

Before approving credit for clients, the Group would firstly assess the credit rate and check the

credit limit at regular intervals. Management of credit risk also includes to receive the guaranties

and guarantees. For the off-balance sheet credit promises, the Company would regularly charge

deposits to lower the credit risks.

1.1 Within-balance sheet assets

Proportion of loans and advances by industries:




Dec 31, 2014 Dec 31, 2013

Amount Prop(%) Amount Prop(%)

Agriculture/forestry/animal/fishing 949,376 0.45 936,806 0.55

Mining 330,802 0.16 769,740 0.45

Manufacturing 39,483,149 18.80 36,245,379 21.16

Production and supply of electricity, gas and water 2,091,225 1.00 2,593,658 1.52

Construction 8,940,251 4.26 7,575,753 4.43

Transportation, storage and mailing 3,440,540 1.64 2,972,757 1.74

Information transfer, computer service and software 1,784,032 0.85 1,418,111 0.83

Commerce 27,261,689 12.98 22,012,942 12.85

Hotel and restaurant 1,177,285 0.56 960,129 0.56

Finance 921,559 0.44 596,292 0.35

Real estate 19,247,264 9.16 14,226,406 8.31

Leasing and commercial service 19,475,651 9.27 17,134,448 10.01

Scientific research, technological service and geological reconnaissance 414,290 0.20 464,734 0.27

Management and investment of water resource,environmental and public facilities

8,116,007 3.86 6,635,117 3.88

Residential and other services 295,065 0.14 249,564 0.15

Education 888,292 0.42 622,800 0.36

Sanitation, social security and welfare 337,715 0.16 270,850 0.16

Culture, sports and entertainment 458,515 0.22 404,895 0.24

Public management and social organization 1,714,126 0.82 1,862,100 1.09

Personal loan 72,735,349 34.61 53,237,185 31.09

210,062,182 100.00 171,189,666 100.00




Concentration regions of loans and advances:

Dec 31, 2014 Dec 31, 2013

Amount Prop(%) Amount Prop(%)

Zhejiang Province 131,885,930 62.79 109,224,522 63.80

Including: Ningbo 103,865,395 49.45 88,928,470 51.95

Shanghai 18,526,749 8.82 15,700,558 9.18

Jiangsu Province 42,169,855 20.07 31,072,511 18.15

Guangdong Province 10,027,060 4.77 8,729,852 5.10

Beijing 7,452,588 3.55 6,462,223 3.77

210,062,182 100.00 171,189,666 100.00

1.2 Derivative financial instruments

The derivative financial instruments are used by the Group in the management of the assets and

liabilities. When the rates of assets and liabilities don't match, for example, the Group purchases

assets at fixed interest with the capital coming from a floating rate, in which the fair value fluctuates

with the market interest rate, the Group would transfer the fixed interest rate into a floating one to

lessen influences caused by the fluctuation.

Derivative financial instruments adopted by the Group in transactions:

Swap contract: it refers to the commitment to swap cash flow within an agreed period.

In an interest rate swap, interest will be paid by both parties participated in the transaction to

each other in an agreed rate within an agreed period. Both parties, as based on the same currency

and the same amount, will exchange a fixed interest rate for a floating interest rate, or exchange

one floating interest rate for another. By the end of the agreed period, the interest will be paid

according to the agreed interest rate.

Forward contract: it refers to the agreement to purchase or sell financial product at a given amount

in the future.

Share option contract: it mean according to the agreed conditions, the options for purchasing or

selling a certain amount of foreign exchanges, bonds and the interest rates at agreed exchange

rate or interest rate within a regulated period once the buyer has paid the seller specific fees for

the share options, which also means that the buyer of the share options has the right to fulfill or

not to fulfill the options, however the seller has no excuse to refuse performing in compliance with

seller's options.




Contract of options on foreign exchange is the agreement on the rights of the buyer and seller to

foreign exchange transactions.

The assessment and controlling standard for the credit risk of the derivative financial instruments

of the Group is just like the one for other transactions.

1.3 Credit risk exposure

The table below illustrates the maximum on-balance sheet credit exposure when available pledge or

other credit enhancement was not considered in the analysis.

Dec 31, 2014 Dec 31, 2013

Due from central banks 69,385,063 61,050,168


Loan to other banks 2,866,596 548,000

Financial assets measured by fair value with its Changes enter into current income statement

8,878,979 1,178,908

Derivative financial assets 1,293,140 2,110,285

Reverse repurchase agreements 17,079,001 39,537,850

Interest receivable 3,015,047 1,972,905

Loans and advance payments 204,749,878 167,302,170

Available-for-sale financial assets 120,095,776 90,355,457

Held-to-maturity investment 16,569,101 15,949,957

Accounts receivable hold for investment 71,554,844 36,083,540

Other assets 294,978 305,327

Balance sheet risk exposure 546,230,003 455,359,158

Financial guarantee 79,655,760 73,014,296

Commitment 52,232,448 31,404,156

Maximum credit risk exposure 678,118,211 559,777,610

In the table above, the maximum risk exposure designated at fair value only represents current

maximum credit exposure, while not the maximum risk exposure when fair value changes in the

future.

The "Other assets" in the table are the financial assets with credit risks of the Group.




Dec 31, 2014Neither past

due nor impairment

Past due but not impaired

Impaired Totalwithin 1 month

1-3 months

over 3 months

Balances with central banks

69,385,063 - - - - 69,385,063

Due from other banks 30,447,600 - - - 194 30,447,794

Loans to other banks 2,866,596 - - - - 2,866,596

Financial assets measured by fair value with its changes enter into current income statement

8,878,979 - - - - 8,878,979


1,293,140 - - - - 1,293,140

Reverse repurchase agreements

17,079,001 - - - - 17,079,001

Interest receivable 3,015,047 - - - - 3,015,047

1.4 Pledge and other credit enhancement

The kind of pledge and it amount are made upon the evaluation of credit risk of counter-party. The

Group takes the kind and value of the pledge as the execution standard.

Classification of pledges:

(I) Reverse repurchase agreements: bills and bonds, etc;

(II) Corporate loan: real estate, machinery facilities, land use right, deposit receipt;

(III) Personal loan: real estate and deposit receipt, etc.

The Management shall check pledge value periodically and ask client to increase the amount of

pledge when necessary according to the agreement.

1.5 Credit quality analysis of financial assets in compliance with credit rating system of the

Group

If objective evidences of depreciation can prove that there is one or more than one circumstance

have happened after the original confirmation of loans and advance payments issuance and these

circumstances can be reliably assessed with influences on the anticipation of the future cash flows,

these loans and advance payments are considered as the depreciated ones.

Credit quality analysis of financial assets in compliance with credit rating system of the Company

dated as the Balance Sheet as follows:




Loans and advances 205,990,797 1,237,869 580,368 390,318 1,862,830 210,062,182

Available-for-sale financial assets investment

120,095,776 - - - - 120,095,776


16,569,101 - - - - 16,569,101

Accounts receivable hold for investment

71,304,844 - - - 500,000 71,804,844

Other assets 294,978 - - - 13,816 308,794

547,220,922 1,237,869 580,368 390,318 2,376,840 551,806,317


due nor impairment



1-3 months

over 3 months


61,050,168 - - - - 61,050,168

Due from other banks 38,964,591 - - - 194 38,964,785

Loans to other banks 548,000 - - - - 548,000


1,178,908 - - - - 1,178,908


2,110,285 - - - - 2,110,285


39,537,850 - - - - 39,537,850

Interest receivable 1,972,905 - - - - 1,972,905

Loans and advances 169,063,019 525,473 35,433 40,520 1,525,221 171,189,666


90,355,457 - - - - 90,355,457


15,949,957 - - - - 15,949,957


35,733,540 - - - 500,000 36,233,540

Other assets 305,327 - - - 13,133 318,460

456,770,007 525,473 35,433 40,520 2,038,548 459,409,981


due nor impairment



1-3 months

over 3 months




On Dec 31, 2014, the fair value of pledge for impaired loan reached to RMB 931,779,000 (Dec 31,

2013: RMB 1,069,508,000). The pledge included equipment, real estate and land. Etc.

1.6 Credit quality analysis of financial assets neither past due not impairment

Rating standard of credit quality of financial assets neither past due not impairment:

High quality: the counterparty has excellent financial conditions and business achievements,

sufficient cash flows without bad credit records and is able to fulfill the contract.

Standard quality: there are negative factors which may affect the counterparties' fulfilling the

contract, including the key financial indexes, cash flow of management and fair value of pledges.

Dec 31, 2014 Dec 31, 2013

High qualityStandard

qualityTotal High quality

Standard quality

Total


69,385,063 - 69,385,063 61,050,168 - 61,050,168

Due from other banks 30,447,600 - 30,447,600 38,964,591 - 38,964,591

Loans to other banks 2,866,596 - 2,866,596 548,000 - 548,000


8,878,979 - 8,878,979 1,178,908 - 1,178,908


1,293,140 - 1,293,140 2,110,285 - 2,110,285


17,079,001 - 17,079,001 39,537,850 - 39,537,850

Interest receivable 3,015,047 - 3,015,047 1,972,905 - 1,972,905

Loans and advances 204,377,995 1,612,802 205,990,797 167,853,613 1,209,406 169,063,019


120,095,776 - 120,095,776 90,355,457 - 90,355,457


16,569,101 - 16,569,101 15,949,957 - 15,949,957


71,304,844 - 71,304,844 35,733,540 - 35,733,540

Other assets 294,978 - 294,978 305,327 - 305,327

Total 545,608,120 1,612,802 547,220,922 455,560,601 1,209,406 456,770,007




1.7 Fair value of pledges past due but not impaired

Item 31 Dec. 2014 31 Dec. 2013

Loans and advance payments Housing, land and building 1,313,094 487,097

At the date of 31 December 2014 and 31 December 2013, there were no book values attributed

to financial assets under re-negotiated contracts as the old contracts were due or the amounts had

already impaired.

2. Liquidity risk

Liquidity risk is the risk of incapable to meet the repayment obligations at the maturity, which can

be resulted by the mismatches of terms or amounts of the assets and liabilities. The management

of liquidity risks of the Group covers the prior plans, current management, after adjustment

and emergency plans. According to supervision authority's administration index system for the

liquidity risks, the Company has also designed a series of daily liquidity risk supervision system

in compliance with applicability and the actual conditions of the Company so as to control the

executions of limitations on specific indexes day by day, and also classify the system in accordance

with supervision and adjustment rates.




2.1 Maturity analysis of assets and liabilities other than the derivative financial instruments

Maturity analysis of assets and liabilities other than the derivative financial instruments of the

Company at the Balance Sheet date:

31 Dec. 2014 Overdue /No Maturity On demand Within 1 month 1-3 months 3 months -1 year 1-5 years Over 5 years Total

Items of assets

Cash and balances with central banks 53,039,354 17,914,584 - - - - - 70,953,938

Due from other banks - 3,815,309 7,636,717 6,063,320 14,195,898 - - 31,711,244

Loans to other banks - - 314,951 562,418 2,055,750 73,391 - 3,006,510

Financial assets held for trading - 9,065,173 31,931 59,145 246,095 924,029 347,088 10,673,461

Reverse repurchase agreements - - 17,024,848 62,081 - - - 17,086,929

Loans and advance payments 2,247,648 612,498 27,420,048 39,146,965 106,978,431 38,611,989 12,527,778 227,545,357

Available-for-sale financial assets - - 5,784,219 27,015,765 44,397,806 36,711,265 15,606,371 129,515,426

Held-to-maturity investments - - 53,319 317,712 1,629,444 8,526,901 9,458,200 19,985,576

Accounts receivable held for investment 251,174 - 3,574,842 8,244,547 34,334,076 30,203,246 1,324,653 77,932,538

Other assets - - 50,837 66,253 122,609 55,279 - 294,978

Total assets 55,538,176 31,407,564 61,891,712 81,538,206 203,960,109 115,106,100 39,264,090 588,705,957

Items of liabilities


- 725,228 22,546,856 31,237,271 34,347,473 - - 88,856,828

Placements from other institutions - - 4,907,940 6,151,892 3,134,715 - - 14,194,547

Financial liabilities held for trading - 911,324 245,239 99,355 16,183 - - 1,272,101

Proceeds generated from repurchase agreements

- - 20,849,475 7,388,112 28,806 - - 28,266,393

Deposits - 158,248,255 26,279,257 35,769,195 74,477,490 43,566,594 4,846 338,345,637

Bond payable - - 1,000,000 9,700,000 28,128,650 7,549,600 10,630,350 57,008,600

Other liabilities 9,394,365 3,144,147 4,300,076 4,264,321 2,237,557 444,977 23,811 23,809,254

Total liabilities 9,394,365 163,028,954 80,128,843 94,610,146 142,370,874 51,561,171 10,659,007 551,753,360

Net amount of balance sheet liquidity 46,143,811 (131,621,390) (18,237,131) (13,071,940) 61,589,235 63,544,929 28,605,083 36,952,597

Off-balance sheet credit liquidity 424,624 63,316,910 9,320,433 18,769,896 36,668,480 2,381,069 1,006,796 131,888,208




Items of assets


Due from other banks - 3,815,309 7,636,717 6,063,320 14,195,898 - - 31,711,244

Loans to other banks - - 314,951 562,418 2,055,750 73,391 - 3,006,510

Financial assets held for trading - 9,065,173 31,931 59,145 246,095 924,029 347,088 10,673,461

Reverse repurchase agreements - - 17,024,848 62,081 - - - 17,086,929

Loans and advance payments 2,247,648 612,498 27,420,048 39,146,965 106,978,431 38,611,989 12,527,778 227,545,357

Available-for-sale financial assets - - 5,784,219 27,015,765 44,397,806 36,711,265 15,606,371 129,515,426

Held-to-maturity investments - - 53,319 317,712 1,629,444 8,526,901 9,458,200 19,985,576

Accounts receivable held for investment 251,174 - 3,574,842 8,244,547 34,334,076 30,203,246 1,324,653 77,932,538

Other assets - - 50,837 66,253 122,609 55,279 - 294,978

Total assets 55,538,176 31,407,564 61,891,712 81,538,206 203,960,109 115,106,100 39,264,090 588,705,957



- 725,228 22,546,856 31,237,271 34,347,473 - - 88,856,828


Financial liabilities held for trading - 911,324 245,239 99,355 16,183 - - 1,272,101


- - 20,849,475 7,388,112 28,806 - - 28,266,393

Deposits - 158,248,255 26,279,257 35,769,195 74,477,490 43,566,594 4,846 338,345,637

Bond payable - - 1,000,000 9,700,000 28,128,650 7,549,600 10,630,350 57,008,600

Other liabilities 9,394,365 3,144,147 4,300,076 4,264,321 2,237,557 444,977 23,811 23,809,254



Off-balance sheet credit liquidity 424,624 63,316,910 9,320,433 18,769,896 36,668,480 2,381,069 1,006,796 131,888,208




Items of assets


Due from other banks - 3,166,832 18,754,017 4,916,804 9,033,655 4,214,851 - 40,086,159

Loans to other banks - - 2,730 5,196 569,804 - - 577,730

Financial liabilities held for trading - 1,178,908 4,719 8,981 41,445 111,629 26,902 1,372,584

Reverse repurchase agreements - - 12,845,006 10,047,687 16,654,058 - - 39,546,751

Loans and advance payments 1,651,023 1,028,699 14,351,749 34,006,823 94,189,365 25,614,311 16,383,860 187,225,830

Available-for-sale financial assets 7,230 - 3,106,923 5,749,045 48,016,307 32,094,394 10,545,766 99,519,665

Held-to-maturity investments - - 506 260,751 2,273,213 7,170,519 6,274,187 15,979,176

Accounts receivable held for investment - - 2,992,473 5,776,793 15,591,575 13,217,779 1,000,000 38,578,620

Other financial assets - - 52,608 68,576 126,924 57,219 - 305,327

Total assets 47,214,716 22,012,792 52,110,731 60,840,656 186,496,346 82,480,702 34,230,715 485,386,658


Borrowings from central bank - - 201,598 - - - - 201,598


- 1,839,025 29,770,783 23,805,777 31,758,223 3,480,359 - 90,654,167



- - 7,049,244 18,175,409 12,431,878 - - 37,656,531

Deposits - 138,472,832 17,179,567 28,768,295 45,584,514 33,210,323 3,918 263,219,449

Bond payable - - - - 5,744,750 9,264,750 3,690,000 18,699,500

Other financial liabilities 1,678,424 1,979,187 4,613,943 4,460,045 2,402,779 73,817 23,811 15,232,006



Off-balance sheet credit liquidity 320,159 49,936,738 10,032,049 18,353,653 24,277,158 1,491,778 6,917 104,418,452




Items of assets


Due from other banks - 3,166,832 18,754,017 4,916,804 9,033,655 4,214,851 - 40,086,159

Loans to other banks - - 2,730 5,196 569,804 - - 577,730

Financial liabilities held for trading - 1,178,908 4,719 8,981 41,445 111,629 26,902 1,372,584

Reverse repurchase agreements - - 12,845,006 10,047,687 16,654,058 - - 39,546,751

Loans and advance payments 1,651,023 1,028,699 14,351,749 34,006,823 94,189,365 25,614,311 16,383,860 187,225,830

Available-for-sale financial assets 7,230 - 3,106,923 5,749,045 48,016,307 32,094,394 10,545,766 99,519,665

Held-to-maturity investments - - 506 260,751 2,273,213 7,170,519 6,274,187 15,979,176

Accounts receivable held for investment - - 2,992,473 5,776,793 15,591,575 13,217,779 1,000,000 38,578,620

Other financial assets - - 52,608 68,576 126,924 57,219 - 305,327

Total assets 47,214,716 22,012,792 52,110,731 60,840,656 186,496,346 82,480,702 34,230,715 485,386,658


Borrowings from central bank - - 201,598 - - - - 201,598


- 1,839,025 29,770,783 23,805,777 31,758,223 3,480,359 - 90,654,167



- - 7,049,244 18,175,409 12,431,878 - - 37,656,531

Deposits - 138,472,832 17,179,567 28,768,295 45,584,514 33,210,323 3,918 263,219,449

Bond payable - - - - 5,744,750 9,264,750 3,690,000 18,699,500

Other financial liabilities 1,678,424 1,979,187 4,613,943 4,460,045 2,402,779 73,817 23,811 15,232,006



Off-balance sheet credit liquidity 320,159 49,936,738 10,032,049 18,353,653 24,277,158 1,491,778 6,917 104,418,452



Dec 31, 2014 Within 3 months 3 months -1 year 1-5 years Over 5 years Total

Currency swap (1,812) - - - (1,812)

Interest rate swap (10,115) 1,753 (96,474) (76) (104,912)

Dec 31, 2013 Within 3 months 3 months -1 year 1-5 years Over 5 years Total

Currency swap (190) - - - (190)

Interest rate swap 6,254 157,792 153,150 3,306 320,502

Dec 31, 2014 Within 3 months

3 months -1 year 1-5 years Over 5

years Total

Forward foreign exchange

Cash outflow (5,941,684) (9,109,923) (747,014) - (15,798,621)

Cash inflow 5,953,694 9,053,545 733,324 - 15,740,563

Currency swap

Cash outflow (72,018,935) (90,779,654) (3,268,545) - (166,067,134)

Cash inflow 71,805,010 90,675,745 3,299,384 - 165,780,139

Derivative financial instruments settled at full amount

Derivative financial instruments settled at full amount include exchange rate derivatives for currency

forward and swap.

The table below represented cash flow distribution of derivative financial settled at full amount.

Balance at the date of maturity means: from the balance sheet date to the contract expiry date, the

amount of derivative financial instruments in specified periods is the contract cash flow, which has

not been converted into cash.

2.2 Cash flow analysis of derivative financial instruments

Derivative financial instruments at close-out netting

Derivative financial instruments at close-out netting include interest rate and currency derivatives

based on rate swap.

The table below represented cash flow distribution of derivative financial instruments at close-out

netting and was held for the purpose of a deal. Balance at the date of maturity means: from the

balance sheet date to the contract expiry date, the amount of derivative financial instruments under

specified periods is the cash flow that has not been converted into cash.




3. Market risk

Market risk can be found within non-transaction business, and also transaction business.

The Group is equipped with market risk management institutions and teams with the Market

Risk Department observing the market risk exposures of the trade, which is also responsible

for preparing the relative market risk management policies and submitting them to the Risk

Management Committee. Under the current risk management structure, the Market Risk

Department is mainly responsible for managing the risks arising from transaction business market

and foreign exchange. And the risks of the transaction business market of the Company mainly

comes from the market maker business, client-investment business and some short-tem market

investment profit chances.

The Group in compliance with the established standard and current management capability

measures the market risks through sensitivity analysis. Before releasing new products or business,

the market risks within shall be identified according to corresponding regulations and rules.

3.1 Interest rate risk

The interest rate risk of the Group arises from the mismatch of the agreed maturity of interest-

bearing assets and interest-paying liabilities and the re-pricing date. And the interest-bearing assets

and interest-paying liabilities of the Group are mainly counted in the unit of RMB. RMB benchmark

interest rate issued by People's Bank of China has set rules for the lower limit of RMB loan interest

rate and the upper limit of RMB deposit interest rate.

Dec 31, 2013 Within 3 months

3 months -1 year 1-5 years Over 5

years Total

Forward foreign exchange

Cash outflow (3,545,380) (8,887,497) (648,424) - (13,081,301)

Cash inflow 3,480,356 8,786,934 629,303 - 12,896,593

Currency swap

Cash outflow (81,043,006) (52,211,180) (4,474,629) - (137,728,815)

Cash inflow 80,773,592 52,085,297 4,430,152 - 137,289,041




Maturity or re-pricing date (the earlier one) analysis of assets and liabilities of the Company at the

Balance Sheet date:

Dec 31, 2014 Within 1 month 1 - 3 months 3 months - 1 year 1 - 5 years Over 5 years Overdue/no interest Total

Items of assets

Cash and balances with central banks 68,471,928 - - - - 2,482,010 70,953,938

Due from other banks 11,292,160 5,735,080 13,420,360 - - - 30,447,600

Loans to other banks 301,686 520,550 1,978,860 65,500 - - 2,866,596

Financial assets held for trading 186,363 508,685 1,922,987 3,023,730 3,237,214 - 8,878,979

Derivative financial assets - - - - - 1,293,140 1,293,140

Reverse repurchase agreements 17,023,001 56,000 - - - - 17,079,001

Loans and advance payments 41,317,924 32,840,686 103,553,195 8,740,251 1,521,072 16,776,750 204,749,878

Available-for-sale financial assets 5,954,578 26,741,424 42,332,206 30,774,587 14,292,981 - 120,095,776

Held-to-maturity investments - 209,962 1,160,561 6,554,288 8,644,290 - 16,569,101

Accounts receivable held for investment

3,151,718 8,079,359 31,634,928 27,119,339 1,319,500 250,000 71,554,84

Other assets - - - - - 3,310,025 3,310,025

Total assets 147,699,358 74,691,746 196,003,097 76,277,695 29,015,057 24,111,925 547,798,878

Item of liabilities

Due to banks and other financial institutions 22,760,846 30,449,638 33,423,851 - - - 86,634,335

Placements from other institutions 4,857,212 6,094,807 3,119,962 - - - 14,071,981

Financial liabilities held for trading - - - - - 1,272,100 1,272,100

Derivative financial liabilities - - - - - 1,303,488 1,303,488

Proceeds generated from repurchase agreements 20,838,891 7,287,435 28,806 - - - 28,155,132

Deposits 168,342,738 32,585,154 61,566,311 37,500,668 4,980 6,531,978 306,531,829

Bond payable 995,940 9,604,062 29,073,778 4,993,095 5,988,516 - 50,655,391

Other liabilities 5,562,399 4,057,900 2,056,540 119,800 9,228,580 8,371,662 29,396,881

Total liabilities 223,358,026 90,078,996 129,269,248 42,613,563 15,222,076 17,479,228 518,021,137

Interest sensitive gap (75,658,668) (15,387,250) 66,733,849 33,664,132 13,792,981 6,632,697 29,777,741




Items of assets


Due from other banks 11,292,160 5,735,080 13,420,360 - - - 30,447,600

Loans to other banks 301,686 520,550 1,978,860 65,500 - - 2,866,596

Financial assets held for trading 186,363 508,685 1,922,987 3,023,730 3,237,214 - 8,878,979


Reverse repurchase agreements 17,023,001 56,000 - - - - 17,079,001

Loans and advance payments 41,317,924 32,840,686 103,553,195 8,740,251 1,521,072 16,776,750 204,749,878

Available-for-sale financial assets 5,954,578 26,741,424 42,332,206 30,774,587 14,292,981 - 120,095,776



3,151,718 8,079,359 31,634,928 27,119,339 1,319,500 250,000 71,554,84

Other assets - - - - - 3,310,025 3,310,025

Total assets 147,699,358 74,691,746 196,003,097 76,277,695 29,015,057 24,111,925 547,798,878

Item of liabilities

Due to banks and other financial institutions 22,760,846 30,449,638 33,423,851 - - - 86,634,335


Financial liabilities held for trading - - - - - 1,272,100 1,272,100


Proceeds generated from repurchase agreements 20,838,891 7,287,435 28,806 - - - 28,155,132

Deposits 168,342,738 32,585,154 61,566,311 37,500,668 4,980 6,531,978 306,531,829

Bond payable 995,940 9,604,062 29,073,778 4,993,095 5,988,516 - 50,655,391

Other liabilities 5,562,399 4,057,900 2,056,540 119,800 9,228,580 8,371,662 29,396,881






Items of assets


Due from other banks 21,702,291 4,733,400 8,556,400 3,972,500 - - 38,964,591

Loans to other banks - - 548,000 - - - 548,000

Financial assets held for trading - 454,031 153,878 393,853 177,146 - 1,178,908


Reverse repurchase agreements 12,836,105 10,047,712 16,654,033 - - - 39,537,850

Loans and advance payments 21,580,689 34,624,770 92,380,690 5,025,919 500,828 13,189,274 167,302,170

Available-for-sale financial assets 2,723,604 4,760,977 44,707,642 28,360,416 9,795,588 7,230 90,355,457



2,784,709 5,074,821 14,530,974 12,343,036 1,000,000 350,000 36,083,540

Other assets - - - - - 2,278,232 2,278,232

Total assets 121,767,903 59,955,505 179,800,717 57,250,596 17,739,753 19,989,332 456,503,806


Borrowings from central bank 200,000 - - - - - 200,000


31,357,756 23,578,939 31,580,211 3,470,000 - - 89,986,906




7,033,609 17,997,041 12,109,183 - - - 37,139,833

Deposits 150,601,082 27,925,700 43,655,734 28,326,819 3,918 4,765,074 255,278,327

Bonds payable - - 4,994,825 7,483,621 5,987,800 - 18,466,246

Other liabilities 5,590,288 3,098,280 2,190,840 - 1,676,710 6,126,348 18,682,466






Items of assets


Due from other banks 21,702,291 4,733,400 8,556,400 3,972,500 - - 38,964,591

Loans to other banks - - 548,000 - - - 548,000

Financial assets held for trading - 454,031 153,878 393,853 177,146 - 1,178,908


Reverse repurchase agreements 12,836,105 10,047,712 16,654,033 - - - 39,537,850

Loans and advance payments 21,580,689 34,624,770 92,380,690 5,025,919 500,828 13,189,274 167,302,170

Available-for-sale financial assets 2,723,604 4,760,977 44,707,642 28,360,416 9,795,588 7,230 90,355,457



2,784,709 5,074,821 14,530,974 12,343,036 1,000,000 350,000 36,083,540

Other assets - - - - - 2,278,232 2,278,232

Total assets 121,767,903 59,955,505 179,800,717 57,250,596 17,739,753 19,989,332 456,503,806


Borrowings from central bank 200,000 - - - - - 200,000


31,357,756 23,578,939 31,580,211 3,470,000 - - 89,986,906




7,033,609 17,997,041 12,109,183 - - - 37,139,833

Deposits 150,601,082 27,925,700 43,655,734 28,326,819 3,918 4,765,074 255,278,327

Bonds payable - - 4,994,825 7,483,621 5,987,800 - 18,466,246

Other liabilities 5,590,288 3,098,280 2,190,840 - 1,676,710 6,126,348 18,682,466





Sensitivity analysis is the primary instrument for measuring and controlling the risks in the

transaction business market, of which the duration analysis is to evaluate the potential influences

of the market price fluctuation of the fixed-profit financial instruments to the Company's benefits

and equity. And the gap analysis is mainly used by the Company to control the risks in the non-

transaction business market.

Duration analysis is also called as persistent period analysis or duration elastic analysis, which is a

method to measure the influences on the economic values of the banks caused by the fluctuations

of interest rate, and also one of the methods to evaluate the sensitivity of interest rate's fluctuation.

Gas analysis is used to predicate the cash flow conditions in the future by calculating the balance

between assets and liabilities in a specific duration in the future.

The Group primarily adopts sensitivity analysis to measure and control the interest rate risks. For

the portfolio of available-for-sale bond investment, the Group uses duration analysis to evaluate the

potential influences of the market price fluctuation of this kind of financial instrument market to

the benefits and equity of the Group. And for the non-transaction financial assets and liabilities with

Held-to-maturity bond investment, clients' loans and deposits as the primary content, the Company

uses gap analysis to measure and control the interest rate risks of this kind of financial instruments.

Descriptive information and quantitative information of sensitivity analysis of the Company are as

follows:

1) Duration analysis

Duration analysis results in compliance with transaction bond investment at that time to the Balance

Sheet date as follows:

Dec 31, 2014

Alteration (base point) of interest rate (100) 100

Alteration of gain or loss by interest rate risk 297,251 (297,251)

Dec 31, 2013


Alteration of gain or loss by interest rate risk 24,222 (24,222)




2) Gap analysis

Gap analysis results in compliance with non-transaction financial assets and liabilities at that time to

the Balance Sheet date as follows:

The above gap analysis is proceed on the presumption that non-transaction financial assets

and liabilities have static interest rate risks. And the analysis only measures the fluctuations of

interest rate within one year, reflecting the influences on the gain and loss of the Group in a year

by the re-pricing of the non-transaction financial assets and liabilities. The analysis is based on

the presumptions that: (1) the incurred amounts of various non-transaction financial instruments

don't change; (2) the income curve moves in parallel according to the changes of interests; (3) the

portfolio of non-transaction financial assets and liabilities are released from other changes. Based

on the above analysis, the real changes of the gain and loss of the Company caused by fluctuation

Dec 31, 2014


Alteration of profit before tax by interest rate risk 1,018,313 (1,018,313)

Dec 31, 2013


Alteration of profit before tax by interest rate risk 840,773 (840,773)

Duration analysis results in compliance with transaction bond investment at that time to the Balance

Sheet date as follows:

Dec 31, 2014


Alteration of gain or loss by interest rate risk 1,537,003 (1,537,003)

Dec 31, 2013


Alteration of gain or loss by interest rate risk 1,009,835 (1,009,835)

The Group adopts Macaulay duration analysis. Macaulay duration of the transaction bond

investment and available-for-sale bond investment is received from specialty software by the

Group and analyzed and calculated with Kondor + system to get an accurate understanding of the

influences of interest rate risks to the Group.




of interest rate may be different from the results received from sensitivity analysis.

3) Kondor + system analysis

The Company adopts Kondor + system analysis to measure and manage the risks of derivative

financial instruments. This system is mainly designed to comprehensively weigh the influences of

factors like interest rate, exchange rate and stock price on the fair values of derivative financial

instruments. The cash positions of derivative financial instruments held by the Company are mainly

effected by interest rate.

Kondor + system analysis results in compliance with cash positions of derivative financial

instruments at that time to the Balance Sheet date as follows:

Dec 31, 2014

Alteration (base point) of interest rate) (100) 100

Alteration of fail values of derivative financial instruments by interest rate risk (64,294) 64,294

Dec 31, 2013

Alteration (base point) of interest rate) (100) 100

Alteration of fail values of derivative financial instruments by interest rate risk (169,595) 169,595

3.2 Foreign exchange risk

The Group is established in the territory of the People's Republic of China and operates within. It

mainly deals with Renminbi businesses, along with USD business for the foreign exchange.

From 21 July 2005 on, People's Bank of China started to implement the floating exchange regime

based on the supply and demand of the market and adjust in reference to the principle of "basket

of currencies", which caused a stable rising of Renminbi against U.S. dollars.




Dec 31, 2014 RMBUSD

Converted to RMB

Other currencies

Converted to RMB

Total

Items of assets：


70,295,084 588,852 70,002 70,953,938

Due from other banks 28,456,494 1,177,103 814,003 30,447,600

Loans to other banks 2,599,910 266,686 - 2,866,596

Financial assets held for trading 8,878,979 - - 8,878,979

Derivative financial assets 346,818 946,315 7 1,293,140

Reverse repurchase agreement 17,079,001 - - 17,079,001

Loans and advance payments 193,959,098 10,649,230 141,550 204,749,878

Available-for-sale financial assets 120,095,776 - - 120,095,776

Held-to-maturity investments 16,569,101 - - 16,569,101


71,492,824 62,020 - 71,554,844

Other assets 3,307,192 2,821 12 3,310,025

Total assets 533,080,277 13,693,027 1,025,574 547,798,878

Items of liabilities：


74,115,885 11,164,275 1,354,175 86,634,335

Placements from other institutions

3,854,500 9,442,911 774,570 14,071,981

Financial liabilities held for trading 1,272,100 - - 1,272,100

Derivative financial liabilities 1,106,009 123,950 73,529 1,303,488

Proceeds generated by repurchase agreements

28,155,132 - - 28,155,132

Deposit 292,050,677 13,037,564 1,443,588 306,531,829

Bonds payable 50,655,391 - - 50,655,391

Other liabilities 29,075,653 308,851 12,377 29,396,881

Total liabilities 480,285,347 34,077,551 3,658,239 518,021,137

Balance sheet net position 52,794,930 (20,384,524) (2,632,665) 29,777,741

Off-balance sheet position 121,261,508 9,609,935 1,016,765 131,888,208

Assets and liabilities in compliance with currencies as follows:




Dec 31, 2013 RMBUSD

Converted to RMB

Other currencies

Converted to RMB

Total

Items of assets:


61,647,215 502,061 45,540 62,194,816

Due from other banks 37,025,325 1,535,021 404,245 38,964,591

Loans to other banks 548,000 - - 548,000

Financial assets held for trading 1,178,908 - - 1,178,908

Derivative financial assets 1,943,091 167,194 - 2,110,285

Reverse repurchase agreement 39,537,850 - - 39,537,850

Loans and advance payments 162,409,984 4,708,037 184,149 167,302,170

Available-for-sale financial assets 90,355,457 - - 90,355,457

Held-to-maturity investments 15,949,957 - - 15,949,957


36,083,540 - - 36,083,540

Other assets 2,274,910 3,322 - 2,278,232

Total assets 448,954,237 6,915,635 633,934 456,503,806

Items of liabilities:

Borrowings from central bank 200,000 - - 200,000


74,137,484 13,193,512 2,655,910 89,986,906

Placements from other institutions 3,842,980 8,200,030 971,993 13,015,003

Derivative financial liabilities 2,092,631 53,040 - 2,145,671

Proceeds generated by repurchase agreements

37,139,833 - - 37,139,833

Deposit 247,889,595 6,808,070 580,662 255,278,327

Bonds payable 18,466,246 - - 18,466,246

Other liabilities 18,552,755 115,255 14,456 18,682,466

Total liabilities 402,321,524 28,369,907 4,223,021 434,914,452

Balance sheet net position 46,632,713 (21,454,272) (3,589,087) 21,589,354

Off-balance sheet position 97,008,594 6,875,222 534,636 104,418,452




The Company adopts sensitivity analysis to measure the possible influences of interest rate changes

to the net exchange loss and gain of the Group. Sensitivity analysis results in compliance with the

exchange rates of assets and liabilities on 31 December 2013 and 31 December 2012 as follows:

The above sensitivity analysis is based on the presumption that the assets and liabilities have static

exchange rate risk structures an it calculates the influences of the rational changes of foreign

currencies exchange rate against Renminbi on the net profits and equities when all the other

factors are kept stable. The analysis is based on the presumptions that: (1) the currency exchange

rate fluctuates at 1% (absolute) against closing price on the balance sheet date (middle price); (2)

currency rates fluctuate against Renminbi simultaneously in parallel; (3) foreign exchange exposure

includes spot exchange exposure and forward exchange exposure. Based on the above analysis, the

real changes of the net exchange gain and loss of the Company caused by fluctuation of interest

rate may be different from the results received from sensitivity analysis.

3.3 Disclosure of fair value

Financial assets and liabilities measured by fair value

Fair value is the price the market participant receives when selling an asset or pays when

transferring a liability in the orderly transaction on the date of measurement. The fair value

measured and disclosed in the financial statement is determined on this basis regardless of whether

that price is observable or estimated using a valuation technique.

The financial assets and financial liabilities measured by fair value are divided into three levels in

terms of valuation as follows:

Level 1: the unadjusted quotation of the same assets or liabilities in the active market.

Level 2: the directly or indirectly observable input values of the related assets or liabilities besides

level 1. The input parameters sources include Reuters and ChinaBond.

Level 3: the unobservable inputs of the related assets or liabilities.

Dec 31, 2014

Alteration of exchange rate (1%) 1%


Dec 31, 2013

Alteration of exchange rate (1%) 1%





2014 Continues fair value measurement

Open market

price (level 1)

Valuation technique-

Observable market variable

(level 2)


Unobservable market variable

(level 3)

Total

Financial assets measured by fair value with variation accounted into profit and loss sheet of the year

- 8,878,979 - 8,878,979

Derivative financial assets - 1,293,140 - 1,293,140

Financial assets held for selling - 120,095,776 - 120,095,776

Total financial assets - 130,267,895 - 130,267,895

Financial liabilities measured by fair value with variation accounted into profit and loss sheet of the year

- 1,272,100 - 1,272,100

Derivative financial liabilities - 1,303,488 - 1,303,488

Total financial liabilities - 2,575,588 - 2,575,588

As of Dec. 31, 2014, the financial assets and liabilities held measured by fair value complying with

the above three levels are as follows:

As of Dec. 31, 2013, the financial assets and liabilities held measured by fair value complying with

the above three levels are as follows:

2013 Continues fair value measurement

Open market

price (level 1)


Observable market variable

(level 2)


Unobservable market variable

(level 3)

Total

Financial assets measured by fair value with variation accounted into profit and loss sheet of the year

- 1,178,908 - 1,178,908

Derivative financial assets - 2,110,285 - 2,110,285

Financial assets held for selling 7,230 90,348,227 - 90,355,457

Total financial assets 7,230 93,637,420 - 93,644,650

Derivative financial liabilities - 2,145,671 - 2,145,671

Total financial liabilities - 2,145,671 - 2,145,671




In 2014 and 2013, the Group has not transferred the financial instrument fair value's levels from 1

and 2 to level 3, neither it has switched the fair values between level 1 and level 2.

For the financial instruments that are traded in the active market, the Group determines their fair

values in compliance with the quotation of the active market; for the financial instruments that are

traded in the active market, the Group determines their fair values in compliance with the valuation

technique. The primary valuation model adopted is the discount cash flow method. The level 2

financial instruments of the Group mainly include the bond investment and derivative financial

instruments. The fair value of Renminbi bond is determined in compliance with the valuation results

of China Government Securities Depository Trust & Clearing Co., Ltd. and the derivative financial

instruments are valued complying with discount cash flow method and Black-Scholes Model. All the

major valuation parameters adopt the valuation method that can observe the market information.

Financial assets and liabilities not measured by fair value

Financial assets and liabilities not measured by fair value include: cash and balances in the

central banks, due from other banks, lending, reverse repurchase agreements, loans and advance

payment, held-to-maturity investment, account receivable investment, borrowings from central

banks, placements from other banks and financial institutions, loans from other banks, repurchase

agreements, deposits and bond payable.

For the held-to-maturity investment, accounts receivable investment and bond payable that are not

reflected or disclosed by fair value, their book values and fair values are as follows:

Dec. 31, 2014 Dec. 31, 2013

Book value Fair value Book value Fair value

Financial assets：

Held-to-maturity investment 16,569,101 17,040,267 15,949,957 15,718,383

Accounts receivable investment 71,554,844 71,578,266 36,083,540 36,196,699

Financial liabilities：

Bond payable 50,655,391 50,640,569 18,466,246 17,382,461

Besides the above financial assets and liabilities, the fair values of the other financial assets and

liabilities of the balance sheet not measured by fair value are determined in compliance with future

discount cash flow method and their book values are similar to their fair values:

Assets Liabilities




2014Beginning

Balance

Change of the Year other comprehensive

income

other equity

change

cash dividend declared

endbook value

end provision

reserveadditional

investment

profit & loss on

investment

cost method


135,000 - - - - - 135,000 -

135,000 - - - - - 135,000 -

cash and balances in the central banks and borrowings from the central banks

due from other banks and placements from other banks and financial institutions

lending and loans from other banks

reverse repurchase agreements and repurchase agreements

loans and advance payment and deposit

other financial assets and other financial liabilities

XIII. Other Items in Balance Sheet after the Reporting Period

According to the resolution of the Board of Directors held on 24 April 2015, the profit distribution

plan (predetermined) of the year 2014 is listed as follow:

1) Distribute 10% of 2014 net profit RMB 561,113,000 as statutory welfare reserve;

2) According to Administrative Measures for the Withdrawal of Reserves of Financial Enterprises

(C.J. [2012] No. 20), The Company will withdraw the amount of 1.5% of risk assets value RMB

998,683,000 as general provision;

3) In 2014, based on the total 3.25 billion shares at the end of the year, the payment of cash

dividend is RMB 4.5 (including tax (i.e. RMB 0.15 as cash dividend per share)) per 10 shares, totaled

RMB 1,462,423,000. This distribution decision is still waiting to be approved by the general meeting

of shareholders.

4) Every 10 capital reserves increase 2 capital stocks.

There's no significant event needed to be disclosed after this financial year in the balance sheet.

XIV. Notes to Main Items of the Financial Statement

1. Long-term equity investment




2. Fixed assets

Year 2014 House and building Transportation Electronic

equipmentMechanical equipment


owned houses

Total

Original price:

Beginning balance 2,491,233 119,207 517,967 64,521 139,916 3,332,844

Purchase 11,299 23,282 116,477 15,582 31,648 198,288


996,356 - - - 2,683 999,039

Transfer from others 60,130 - - - - 60,130

Sale & scrap (2,227) (10,667) (4,467) (693) - (18,054)

End balance 3,556,791 131,822 629,977 79,410 174,247 4,572,247


Beginning balance 479,815 78,063 248,404 35,681 99,243 941,206

Provision 164,193 13,758 91,220 9,533 16,794 295,498

Write-off (963) (10,314) (4,232) (632) - (16,141)

End balance 643,045 81,507 335,392 44,582 116,037 1,220,563

Impairment provision：

Beginning balance 1,662 709 1,709 725 - 4,805

End balance 1,662 709 1,709 725 - 4,805

Book value：

End balance 2,912,084 49,606 292,876 34,103 58,210 3,346,879


2013Beginning

Balance

Change of the Year other comprehensive

income

other equity

change

cash dividend declared

endbook value

end provision

reserveadditional

investment

profit & loss on

investment

cost method


- 135,000 - - - - 135,000 -

- 135,000 - - - - 135,000 -




Year 2013 House and building Transportation Electronic

equipmentMechanical equipment


owned houses

Total

Original price:


Purchase 73,667 15,098 100,706 7,091 11,252 207,814


23,547 - - - - 23,547

transfer from others\(to) (6,806) - - - 12,073 5,267

Sale & scrap - (6,637) (90,254) (5,765) (5,446) (108,102)

End balance 2,491,233 119,207 517,967 64,521 139,916 3,332,844


Beginning balance 355,913 68,311 258,984 32,221 86,264 801,693

Provision 123,902 16,132 77,812 9,053 18,326 245,225

Write-off - (6,380) (88,392) (5,593) (5,347) (105,712)

End balance 479,815 78,063 248,404 35,681 99,243 941,206

Impairment provision：

Beginning balance 1,662 709 1,709 725 - 4,805

End balance 1,662 709 1,709 725 - 4,805

Book value：

End balance 2,009,756 40,435 267,854 28,115 40,673 2,386,833


As of 31 Dec. 2014 and as of 31 Dec. 2013, the houses and buildings for which the Group applied

for property ownership certificates respectively valued at RMB 201,351,000 and RMB 14,901,000.

The management believed that no any significant obstacle would affect the application for property

ownership certificates of houses and buildings, and above issues had no material negative effects

on the overall financial position of the Group.

As of 31 Dec. 2014 and as of 31 Dec. 2013, the original book value of fixed assets which were fully




depreciated but still used amounted to RMB 281,414,000 and RMB 233,051,000. The net book

value was respectively RMB 7,972,000 and RMB 6,390,000.

As of 31 Dec. 2014 and as of 31 Dec. 2013, there were no temporarily idle fixed assets.


2014 2013

Interest income

Loans and advances issues 13,333,909 12,927,921

Including: Corporate loans and advances 8,162,235 7,699,750

Personal loans and advances 3,744,204 2,769,882

Notes and bills discounts 1,189,327 2,297,100

Commercial financing 238,143 161,189


Balance with central banks 845,182 743,797

Placements to other financial institutions 198,402 125,860

Reserve repurchase agreement 2,015,193 1,664,345

Bond investment 2,408,434 1,612,970

Including: financial assets held for trading 181,288 120,094

Financing product and credit plan 7,927,085 5,282,008

Others 390 122

28,171,966 23,494,890

Interest payable

Due to other banks (4,519,357) (2,223,054)

Placements from other institutions (638,900) (342,406)

Deposits (6,350,864) (5,219,738)

Repurchase agreements financial assets (1,401,053) (3,215,483)

Bond issuance (1,105,464) (783,869)

Others (806,930) (452,558)

(14,822,568) (12,237,108)

Net interest income 13,349,398 11,257,782




4. Operating activities cash flow

2014 2013

Net profit adjusted to operating activities cash flow

Net profit 5,611,130 4,845,422

Add: loss for fixed assets impairment 2,521,150 1,480,052



Amortization of deferred expenses 297,067 264,087

Losses (gains) from disposal of fixed assets, intangible assets and other long-term assets (100) 14,563

Loss (gain) of fair valve adjustment (135,016) 154,182

Investment income (156,351) (120,799)

Increase of deferred income tax assets 98,467 (236,359)

Increase of operating receivable (26,537,324) (46,773,809)

Increase of operating receivable 40,654,975 78,972,984

22,675,755 38,865,015

XV. Comparative Data

As described in Appendix II 2, as we have adopted several corporate accounting standards on July

1, 2014, the accounting treatment and presentation of several items and amounts of the financial

statements have been altered so as to comply with the new requirements. Accordingly, several

data of the previous year has been adjusted and several comparative data has been recategorized

and edited so as to comply with the presentation and accounting treatment requirements of the

financial statement.




2014Weighted average

ROE (%)

Earnings per share(RMB)

Basic Diluted

ROE for ordinary shareholders 19.45 1.89 1.89

ROE for ordinary shareholders after deducting non-operating

19.51 1.90 1.90

2013Weighted average

ROE (%)

Earnings per share(RMB)

Basic Diluted

ROE for ordinary shareholders 20.41 1.68 1.68

ROE for ordinary shareholders after deducting non-operating

20.43 1.68 1.68

The confirmation on the items of non-operating gains and loss of the Group is reported in

compliance with CSRC Notice [2008] No. 43 the Explanatory Announcement Concerning the

Information Disclosure by Companies Offering Securities to the Public No. 1-Non-recurring Profit &

Loss.

Gains and loss generated by fair value change in respect of financial assets held for trading

investment income received by disposing financial assets held for trading and available-for-sale

financial assets were recognized as a part of Company's operating gains and loss, thus were not

included in non-operating gains and loss.

2. ROE (return on equity) and earnings per share

2014 2013

Profit and loss on the disposal of non-current assets, including the written-off impairment provisions

100 (20,463)

Profit and loss from changes in the fair value of investment real estate which is subsequently measured at fair value

(13) 1,871

Other non-operating income and expense besides the above items

(19,785) 11,811

Affected amount of income tax 1,916 1,695

Total (17,782) (5,086)

1. Statement of non-operating gains or loss

Supplementary Information of Financial StatementsFor The Year Ended 31 December 2014



Introduction to Bank of Ningbo

Bank of Ningbo – Head Office

Address: No. 700, Ningnan (S) Road, Ningbo, Zhejiang, China

Tel.: 86-574-89068221

Postal Code: 315100

Shanghai Branch

Address: Floor 20-22, 21st Central Bu i ld ing , No . 210 , Century Avenue, Pudong New District, Shanghai

Tel.: 021-31158209

Postal Code: 200003

Nanjing Branch

Address: No. 120, Hanzhong Road, Gulou District, Nanjing

Tel.: 025-51808088

Postal Code: 210005

Suzhou Branch

Address: No. 129, Wangdun Road, Industrial Zone, Suzhou

Tel.: 0512-65828030

Postal Code: 215005

Hangzhou Branch

Address: No. 146, Baochu Road, Xihu District, Hangzhou

Tel.: 0571-87207056

Postal Code: 310000

Shenzhen Branch

Address: Floor 1 D, Floor 2 & Floor 3 B, Times Fortune Building, Central Zone, Fuhua Third Road, Futian District, Shenzhen

Tel.: 0755-22661999

Postal Code: 518026

Established on April 10, 1997, Bank of Ningbo Co., Ltd. (hereinafter refers to "Bank of Ningbo") is a joint-

equity commercial bank with independent status of legal person. In May 2006, Bank of Ningbo introduced an

overseas strategic investor-Overseas-Chinese Bank Corporation. On July 19, 2007, Bank of Ningbo was listed

on the stock market in Shenzhen Stock Exchange (stock code: 002142) and became one of the first batch

of listed municipal commercial banks. By the end of 2014, Bank of Ningbo has already had 246 business

institutions, among which there are 10 branches, namely: Shanghai, Hangzhou, Nanjing, Shenzhen, Suzhou,

Wenzhou, Beijing, Wuxi, Jinhua and Shaoxing Branch, 1 head office business department and 235 sub-

branches.

In recent years, Bank of Ningbo has been actively promoting innovations in management and financial

technologies, and building eight profit centers of corporate banking, retail company, personal banking, credit

card, financial market instrument, asset custody and investment banking to realize the diversification of

profits. By the end of 2014, the total assets of the Bank was 554.113 billion yuan, total deposits 306.532

billion yuan and total loans 210.065 billion yuan with an non-performing loan ratio of 0.89%, loan provision

ratio of 2.53%, capital adequacy ratio of 12.40% and core capital adequacy ratio and tier one capital adequacy

ratio of 10.07%. In 2014, the net profit attributable to shareholders of parent company is 5.627 billion yuan

with per share earning 1.89 yuan. As one of the banks with high assets quality, strong profitability, high capital

adequacy rate and low non-performing loan rate in China's banking sector, Bank of Ningbo was listed in "2014

Top 1000 Global Bankings" and "2014 Top 500 Global Banking Brands" by the British magazine "Banker",

ranking world No. 220 and 264 respectively.

Major Networks


Beijing Branch

Address : F loor 1 -2 , 11-15 , Guangyao Dongfang Center, No. 100, West Third Ring (N) Road, Haidian District, Beijing

Tel.: 010-53266280

Postal Code: 100005

Jinghua Branch

Address: No. 1133, Danxi Road, Wucheng District, Jinhua

Tel.: 0579-89163077

Postal Code: 321017

Wenzhou Branch

Address: No. 260, Nanpu Road, Lucheng District, Wenzhou

Tel.: 0577-88009900

Postal Code: 325000

Wuxi Branch

Address: No. 666, Zhongshan Road, Chong'an District, Wuxi

Tel.: 0510-81086888

Postal Code: 214043

Shaoxing Branch

Address: Beichen Commercial Building, No. 653, Jiefang Avenue, Shaoxing

Tel.: 0575-89118809

Postal Code: 321000


财务报表附注（续） 2014年12月31日

单位：（人民币）千元

2014 ANNUAL REPORT - 宁波银行

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